iv tried it several times in several new projects just to be sure, I checked the wireframe and have adaptive tessellation enabled, the mesh and material are a 1:1 copy that iv been using in my UDK july build project which works fine.Wirefame is tessellating the mesh as the camera gets closer to it, but its just not adding any height, its slightly bumpy, almost distorting the mesh, but not adhering to the material editors mesh view (used sphere, plane, cube)
I have applied it to another mesh (a weapon skeletal mesh) and it seems to have worked, but it should also work on the ground mesh i originally applied to, as stated, worked in UDK