Ok a couple more questions here:
- What is the size (in pixels, like 2048x2048) of the heightmap you are importing? Also which file format (raw, png etc)?
- Was the heightmap created in a separate program such as World Machine, Terragen, Scape?
The fact that you need to use the landscape tool to get the detail to show up, and also that you sink into it, sounds like an with the LOD on the landscape. If you zoom out from a mountain on the landscape, you will see it morph into a lower level of detail after a certain distance, and sometimes it can radically change the shape of the mountain.
It almost sounds like that is happening, but way to close to the camera/player. Can you select your landscape from the list of items in Scene Outliner, and then look into the details panel, under the LOD section there are 4 settings. Check the settings, in my level they are set like :
LODLevel = -1
Export LOD = 0
LODDistance Factor = 1.0
LODFalloff = Linear
Let me know if any of that helps at all, it’s a really strange you are having… 