True…that would be the preferred method! But I am not aware of any access to the terrain heightmap via the material editor 
Edit: or @ would it be possible in an easy way for you guys to enable access to the landscape heightmap via materials (like lightmassAO or the DistanceField Nodes) so we could figure out a way to do this that doesnt need the overhead of DistanceFields just to achieve that specific effect?
The rest can actually be handled quite in a smart way…like the different terrain materials etc that doesnt need code work