I don't know any good ways to fix the artifacts that you have in your image using regular image-processing software. You might be able to to something like Photoshop that has a healing brush tool to get a workable effect, depending on your source material.

Or you could just push the results through a terrain editing-type program like Wilbur. http://www.ridgenet.net/~jslayton/Fu...ol4/index.html has some suggestions. The results of following more or less these suggestions gives a result like that shown below:

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