I think scale would depend on how tall the "mountains" are. If you want to make this a town and environs, I would think of them as Hills more mountains, and that would allow you to have a larger scale, with the town around the lake instead of on one side of it. Think along the lines of a Box Canyon town sort of thing. Just a suggestion though
A couple of comments though...You might want to place the river layer on top of the mountain layer because the sources fade into the mountains. Another is maybe to blur the lower layers of the mountains a bit more to have them blend in a bit better. As is they look quite a bit "stepped".