Here are some more screenshots of my terrain engine.
This has specular highlights enabled, tiled textures, a new alpha blended sun texture (a billboard as well), and several other new features that might not be apparent from the screenies.
Real soon I'm putting in a sun glare quad that will be alpha blended with the screen to simulate the white out you get when you look at the sun.
The sun direction is taken into account during the render. I'm simply taking the sun position vector, normalizing it, and using that normal vector for my actual directional light. The sun is no longer a point sprite and so when you go behind a hill....it is clipped by the terrain geometry properly and it is also blended into the sky rather nicely as well.
Next step is to make the terrain so that it never ends no matter how far you walk off into the horizon. Not hard to do. Also some level of detail texturing is in order as well as blending in other tiles to create better looking terrain.
Overall its going well and I'm rather excited about its progress.
It still uses Direct3D's crappy vertex lighting but I'm writing a pixel shader for it which is soon to be implemented.