as you can see, ive been focusing on generating the terrain.
this image is using a 1024x1024 heightmap which is a little high, it eats too much processing power, so the game will probably use 256/512 instead.
I may make it player optional so that those with better computers can enjoy a higher quality terrain, but it depends on how much of an effect that has on gameplay (e.g. a player with 1 quality could see somebody how is hidden by a higher detail level) ... actualy a quick test suggests that the circumstances that that could happen in would be so rare that its not worth worrying about, so ill probably make it an option.
if you compare this to the image in my first post, youll see that i have a better lighting system (its not actually shadows, just a more advanced form of lighting) also, the texturing is much better, that may also be less noticeable in the real thing, especially if you have an older graphics card, but ill try to keep it.
most of the improvement in terrain generation comes from a huge improvement in the perlin noise generator. I found a way to speed it up too, it can do a 1024x1024 image in around a second now, rather than the 100 second it was doing earlier (and my original code would have taken 2 days to do it

)
I had been suffering from a very strange and annoying problem that took a long time to solve, it turned out to be something i already knew about, i just hadn't realized the seriousness of the issue.
the way a heightmap works is that an image is given to the terrain generator, it then creates the terrain by varying the level of the ground by the colour of the pixel in a corresponding position in the image, but here is the problem, the image only has 256 levels (its an 8bit grayscale) so i only have 256 different heights to work with... that wouldnt be so bad except that the perlin noise only used the middle 3% or so (which is fine when your using floats, since they have a LOT of levels), meaning that I only had 8 or so levels to work with. That is a *serious* problem, all details are lost and in extreme cases you get a very retro layered look. I finally solved it by simply multiplying the perlin noise by 32 before putting it in the image, and suddenly everything was looking beautiful.
EDIT: after a bit of testing, ive discovered a bug in pandas heightfield generator (GeoMipTerrain) that is a little odd, it seems it makes the terrain quality around the focal point really unreliable, sometimes its high as its meant to be and sometimes its much lower for no apparent reason, they have a better version in the CVS apparently but i don't want to compile that version because i want anyone who is interested in development to be able to try it out easily, hopefully they will release it officially soon...