Recently I wrote two tiny texture nodes. They don't do much, just exposing the coordinates (x,y,z) to the node system and a node that calculates the distance between two coordinates (vectors). However, those two nodes just got committed to the blender svn repository!
Using blenders new texture node system (currently in svn) you can setup a system to generate terrains very much the way you could do with InnerWorld.
For more information, see my forum posting.