I dropped a custom terrain .res into the AH Beta. The terrain loaded and I was able to fly offline. I wanted to see the changes that would have to be made to update terrains. Here's what I found. My custom terrain textures are no longer there, I get the new defaults. The elevation changes look more fluid and not so sharp. Transitions are gone (done differently in the new TE I'm sure), The shoreline was gone, a white border taking it's place. Also, my FR are half what they were, running full detail in AH and in the Beta. If you want to see the things I am talking about, just drop another terrain into the Beta and go for a flight.
Really looking forward to getting my hands on the new TE.
Edit: I just loaded Tunisia. It is now a tropical jungle.
I hope updating existing terrains won't be too crazy. We shall see.