Here are some FREE Terrain/Heightmap editors that I have gathered and tested, language denotes opensource licensing.
TerreSculptor HMES (Alpha, Windows)
Lithosphere (Python)
Scape Editor (Binaries, C++)
L3DT Standard Edition (Free, Windows)
Torque3D Terrain Editor (Windows/Linux, C++)
Updated/Suggestions:
IrrRPGBuilder (MIT/X11)
Artifex Terra 3D (Free, Windows)
cheers 

Yes, I got to try Artifex Terra when I was doing Ogre3D some time ago, and it really is a great terrain editor!