Doing manual RGB elevations will get you in the neighborhood of the ballpark of the final map. It's a decent way to get going, but you'll likely end up still smoothing and sculpting a bunch of stuff.
L3DT will let you do so many things that I don't even know where to begin. You can create your entire map in L3DT, and then export the heightmap. You can also import real terrain heightmaps into L3DT and play around with them.
Also, you can take your heightmap and copy and paste sections of it, like islands and such, around the rest of the map in a photo editor, then re-import it into the TE or L3DT for further processing.
I won't even start in on what Blender and AC3D can do. Absolutely sick.
As a side note, folks may have noticed I'm not on the game much anymore. I try to get on once a week, but in reality, with the time I have available, I'd rather be creating land objects and terrains.