@Millionviews Actually, your original thoughts on how to tackle this(splitting terrain into several parts by height) were quite close.
The team I’ve used to work with had a task to create very steep volcano island. Its proportion had to be way beyond something earthly.
World dimensions were 4km x 4km and 10km in height. With conventional approach, flat beach areas did look okey, however as the landscape transitioned into volcano part, triangular, spiky artifacts plagued the place. Resolution increase was out of budget and aggressive filtering was just removing all important details.
The cure came in two parts. First was good use of tessellation, but it was not enough. The second move was to have each tile(512x512 tile size, 16 tiles per side) positioned at different Y.
While whole world height range was 10km, each individual tile was mapped to a range of 2.5km.
Outer square of tiles covered height range from 0 to 2.5km, then, moving inwards, next loop of tiles covered the height from 1.25km to 3.75km third loop 2.5km -5.0km fourth loop 3.75km - 6.25km and so on.
Central tiles had height range of 7.5km-10km. As you noticed, there was sufficient overlap between the tiles, chosen large enough to allow border between tiles to pass at varying heights.
This approach, coupled with ~0.48 vertex per meter resolution, resulted in pretty detailed terrain, even at high slope angles. Instead of having 65536 points for 10km, result was ~209k. I was not directly responsible for this implementation, so unfortunately, I cannot give you details, what software was used to export heightmap tiles and how accounting for tile specific Y position was done. I bet it is pretty straight-forward, but I don’t think such functionality is included by default in commonly used terrain generation packages. I guess that UE world composition does not allow you to offset levels in Z space either, without engine modifications that is. Besides, above-mentioned approach is not universal and cannot be easily applied for every terrain shape.
[HR][/HR]
But…
Looking at your pictures, I have a strong belief, that you are using heightmap renderer in a way it was never meant to be used. By that I mean trying to bring in very high frequency details in your terrain, instead of relying on other means for that. Brief glance at Gale crater geology leads me to conclusion, that you should be able to get away with what ue4 and world composition offers by default. Seeing your in-engine shots and cross-comparing it to what you would expect could help. Maybe there is something flawed on the way from WM to UE4 in your case.
I am using tessellation (displacement) with the world aligned texture node. (the complex one). I modified the node a bit to have the node merge two normals in one world aligned node.