Back to the bmp file question the answer is yes, you can use a 1024x1024 grayscale bmp file to set the terrain's elevations.
Use any graphic tool you have to make the grayscale bmp file. Black (0,0,0) will be sea level (0 elevation) and white (255,255,255) will be the maximum elevation. Grays will be in-between. Once you have your file, start the TE and open your terrain. Click File/Import, browse to your bmp file, set the max elevation represented by white, and click OK. The terrain's elevations will now be set.