I'm trying to find a decent way to make custom DEM's for my city. The reason is that I want to turn it into a 3d town. But I've found the terraforming in the terrain software isn't very accurate so I was trying to do a DEM in photoshop. If you have any suggestions or can point me in the right direction I'd appreciate it.
I hate to say it but most of us are still trying to figure out the same thing. Creating your own home-made DEM from scratch in a raster program just isn't too easily done.
If you're on a PC, your best free option is Wilbur. Leveller is probably the best terrain painting app out there(again, PC), but it runs about $200. FT Pro will run you about $40. Not quite as good with the hf-editing tools, but the texturing tools are good. That last is the product of the same guy who brought us Wilbur. I have some threads here on creating hfs with photoshop as well. Maybe I'll hunt 'em down and put them in my sig.
EDIT: There you go!