hehe, i feel with you!
had all that trouble how to get real terrain data into xsi and checked so many different applications. my biggest problem was to get a large area, the alps, as a good, but not to high detailed map into xsi. so finaly i did it with accutrans3d and .hgt files for the close shots, the far away shots i made with ultimate maps downloader, saved the area as arcGIS terrain png and used it as discplacement map
did you try http://www.dubaron.com/yatt/
Merge .hgt files to a single larger file
maybe i should give it a try
to expencive for our project but dreaming how cool it could be: http://www.metavr.com/products/terraintools/terraintools.html
would be fantastic to have such a software as a plugin