Srry Nhawk, but yes tiles are replaced in the texsrc folder of the terrain.
My issue was that there seems to be something funky going on with the snow layer.
Basically imported a elevation bmp in to AH (set max alt to various things in testing 10k-28k) I had close to pure white around the edges, so I presumed that would kick alt up to 18k or near about there.
Anway - I ran tile setter - set snow at 7k - nothing.
I went on the TE and checked info for the high points - and they were anywhere between 6-10k. But would not take the snow. They would start there last layer (Rock) and run that up to the highest points.
Eventually I ended up getting it to work, but I have about 5-6 layers of rock and snow, and it was the longest guessing game as they did not seem to coodinate with the "Y" axis info data in the TE.