3D Side scroller terrain creation


I am dveloping a 3D side scroller game currently and it’s unclear to me how would you create a terrain for this type of game. I’m not talking about placing blocks and stuff, I’m talking about real terrain with caves for instance.
Here’s an example from the game called Leo’s fortue:

I wouldn’t use terrain for the main gameplay area.

The rocks that look like they make up the gameplay should be static mesh.

The background should be terrain to fill it out and add depth.

Using terrain for this would result in a ton of iteration on the terrain and taking up all your time, rather than just moving the meshes around.
Use the tools for the job.

So you suggest that I create bunch of rocks and other environment stuff as static meshes and arrange them in the editor?

Do you have any tools to suggest?