Well, with the info from Pokie, and some fooling around with Paint Shop (the poorman's Photoshop), I've been making some decent and natural looking mountains this way:
First, create a basic shape of the mountain in the TE and raise it 100 feet. This is just to make the shape lighter in color than the surrounding terrain, so it can be seen in Paint Shop.
Then open the BMP in Paintshop and convert it to grayscale. Next use the Freehand Selection tool (check the "Anti-Alias" box) and trace a selection around the mountain shape. Then under the Selections menu, contract the selection 1 or 2 pixels, and flood fill it it with a color slightly lighter than the surrounding pixels. (Contracting the selection keeps the shape of the selection, while making it smaller by the number of pixels you specify.)
Then, contract the selection again, flood fill again, and so on until you get to the peak. The effect is a smooth transition from darker to lighter colors, from base to peak. You can add irregularities, for a more natural look, just by making some freehand alterations to the selection, rather than just contracting it all the way up.
Well, it's at least marginally better than the way I was doing it.