I didn't even know this existed!
The Terrain Editor Preview Release was never quite finished, and there were a few bugs. I'll add them to the Bugs list at some point.
Otherwise, it needs some more work done to it, which I shall detail later.
Also, I think it would be worth removing the current Terrain Generator tool, and replacing it with the Terrain Editor. (Assuming Terrain Editor has generation tool? I can't remember)
EDIT: Perhaps merge the two?