I found another method for making even better terrains in MAX..
first you make the terrain exactly how you want it to look in max..
export..
load OZ..
new scene, with any size ground mesh.. (EDIT1:: actuially, make the ground mesh the same or bigger size than the terrain you made in MAX)
import the MAX terrain not as ground mesh but either mesh or the other..
place the terrain ontop of the ground mesh.. and it works fine, and looks great.
ill make and post an example sometime soon