Cutting a hole in terrain

A question that pops up occasionally is 'How to do I cut a transparent hole into my terrain?'. The answer is to apply a superblack transparent texture to your terrain which has pure black where you want the hole. For your terrain texture set blendingmode to bmTransparent and set imageAlpha to tiaSuperblacktransparent. Remember jpegs arent lossless which means that where your image may be 100% black, when it saves it it may actually be saved as 99% black. When you view your terrain you could see an ugly black outline around the terrain hole. The solution is to use bmp, tga or jp2 files which are lossless.