What would be the best way to go about terraforming in the unreal engine ?
The short answer is that you can’t. You can change the heightmap of the landscape at runtime but it doesn’t update collision or pathing. You can use static meshes to push up through terrain.
This guy is doing some terrain work: https://forums.unrealengine.com/showthread.php?58288-WIP-Procedural-Terrain
This guy is doing voxel terrain work: Cubiquity for UE4 - Voxel Terrain Plugin - Work in Progress - Unreal Engine Forums