Running into this problem myself, if you're still having issues with the blending, making the terrain larger (by width, not height), actually seems to smooth it out. Unfortunately though, it screws with your original dimension intentions (lel).
There is a new version of Gimp, 2.9.2.tar.bz2 This new version has an option in the 'Image' drop down menu Right below mode it says "Precision" which allows you to choose which bit your image will be in, 16bit being an option as well as 32bit. The results of choosing 16bit over 8bi are astounding, smudging no longer looks layered but nice and smooth blended.
Unfortunately, however, gimp 2.9 is in the development series and isn't listed under Gimp's official installers. I'm not sure when it's official release will be, but hopefully soon. Now, if you go exploring for it on your own, there are torrents you can download for it, but as I said it's rather unstable and doesn't play nice with windows yet.