Can Virtual Heightfield Mesh / RVT be used for procedurally generated terrain?

Most likely you can but I haven’t tried so I hesitate to say. You would need to have the terrain write a vectorized displacement to the render target that the heightfield mesh reads from. In other words, it would need to tell it what direction to displace in and the amount in order to deal with the inconsistent Z direction.

If that doesn’t work, or you don’t want to bother, then consider using parallax occlusion mapping.
It is not without it’s faults or limitations, but it can work very well. Because it is per pixel displacement, it can be more detailed than tesselation - but is more prone to artifacts.