hey xilith! looking pretty sweet!
though I have to say I agree with the two main points, i.e. sharp peaks ("obvious" one-vertex tips... they always give things a slightly "noobish" feel, to be honest... not meant as an insult or anything!! just speaking my mind
)... Same thing goes for texture stretching...
here's my 2 pence/cents/shillings/credits/gp:
...how about you use the blurred height map for general layout, THEN go into sculpt mode (perhaps adding a multi-res modifier for sculpting - its basically subsurf for sculpting, givving you a higher resulution mesh to play with (eg to eliminate spikes) and add in all those little details again by hand.. I know sculpt mode can be a bit of a pain to get used to, but if you use the tools Draw and Grab (draw with pressed ctrl-key to make holes/craters), you can get some pretty fun results pretty quick!
Also, not sure how you are mapping the texture to the mesh right now, but it might be worth trying to get a top down view on the terrain, and then (in ortho mode) unwrapping the terrain "from view". Then, in the uv-editor scale the resulting grid huuuuuge, so that about one tile of the grid occupies the entire image space... the other tiles wrap around, using the same image, resulting in high detail- and usually seamless textures... uh... kinda hard to explain, sorry
... If you do this, be sure to use uv-mapping as "Mapping/Coordinates" in the textures panel, too...
Hope that made sense... though I doubt it
OOOoooor you could try just slapping a subsurf modifier onto the original terrain (using the original height map) and see what that looks like!
but apart from that, i really like the setup of the scene -- could indeed turn out as a very nice wallpaper!
