First off, these look like pretty realistic (but blurry) hills. Second, if you want to get rid of some of them (to have more flat spots) just use a soft-tip eraser, turn down the opacity of the eraser to under 20% and erase out the areas that you want to be flatter...note that this will only work if the hills are on their own layer. If everything has been flattened/merged together then you will have to use the eyedropper tool to select a good green color and then airbrush over the tops of the hills you want to be flatter. You could also go back to the gray-scale layer and airbrush over some areas before running the lighting effects filter.

As for good colors, well...that's all in the eye of the beholder. RobA has a post here:

http://www.cartographersguild.com/sh...dient+Goodness

which links to a site that has tons of cool gradients that might help inspire you.