I think I fixed it. I made an attempt with a 2x2 patch which translated to a 66px x 66px bitmap.
Heightmap:
[img:center]
http://users.telenet.be/sunspot/dos/patch66x66.bmp[/img]
Result:
more testing is probably needed and I have to make a new release, but this is looking well.
UPDATE
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OP updated with the new release and usage updated as well. Take note you now have to use the DATA file no longer the patch file.
Currenlty only use square terrains, there is still a problem with 2x1 or 1x2. It has something to do with how X and Y are mirrored and reversed in the patch file vs the bitmap file and it's giving me a headache.