The best way that I seem to make L3DT work is to follow Waffle's suggestion. Here's the method, in my words (and this works):
Open a new file in TE.
Set it up for 256 miles (this is a 10 x 10 sector map)
Make a rough rendering of your land masses, at 10 foot elevation.
Select Export to create a height.raw file, which you will find in your project folder.
Open L3DT Pro.
Before doing a single thing, select File - Import - Heightfield
Find and select the file you created above in your folder
Click Next in the Heightfield Import Options (1/2) pop up
In the Heightfield Import Options (2/2) pop up,
- click on the Options button next to the file format, which should be "raw binary data file"
- Double click on the Mode line and select "16 bit signed (manual scale), and click OK
- Make sure InvertY is "true"
- change Horizontal scale to 660
- Click OK
- In the Raw import options pop up, enter 4096 in the Width and Height fields, and make sure Invert Y axis is checked. Click OK.
Your terrain should now show up in the Heightfield tab of L3DT Pro.
Massage the terrain as much as you want.
Select File - Export from active map layer.
- Select "Raw" as your File format and select the directory where you want to export it.
- Click the option button and set mode to "16-bit Signed (manual scale)" and "Invert Y" to "true"
- Export the Raw file and name it "newheight.raw" (or whatever) and place in your working terrain folder.
Open the AH TE editor and Click on "File > import signed height map" to import this new height map
Work on your terrain some more inside TE.
Follow and repeat these steps as necessary.