msHeightmap is a plugin for generating, saving and loading heightmaps that can then be converted to a polygrid (mesh) in Milkshape3d, and saved in any of the formats the programs supports.
Due to the built-in restrictions in Milkshape3D 1.x, terrains with more than 16384 trianlges or 8192 vertices cannot be created (which means that the max size for a square terrain is 89x89), but the plugin handles heightmaps up to 256x256 that can still edited and used in other programs.