I believe your looking for the .xyz filetype.
It uses a grey scale image in combination with, well x,y, and z, coords to allow importation/exportation of more precise terrain data.   Also, its plenty possible to allow importation of 16 or even 8bit raw data as a template, and then edit that in game. I would think its impossible to get the wow terrain 'feel' through heightmap manipulation alone.  There are plenty of terrain generation kits out there some of which I use for other games which would let you pre-gen the overall structure of the terrain, then import into noggit, edit to taste.  Depending on how well the implantation of importation is you could also remove the issue with the lack of depth by forming a gradiant between each pixel of the imported image so as to connect the 'steps' that you get when importing low quality heightmap data. Its also fairly easy to rip real-world heightmap data, edit it, and come out with decent 8bit results at massive scale (400kx400k).

Bundysoft makes a 3d heightmap editor called L3DT, which you may be familiar with, it also can export to a few other formats which might make it a perfect candidate for heightmap>wow conversions.  Could also use its 'attribute map' function to allow pre-texturing of surfaces done with the l3dt texture calculator tool, thus saving time.

There something to be said for the random quality of wow maps, but I want to try and test out the possibilities of  having more realistic terrain, especially for pvp areas.  You could theoretically import an entire european nation or a hawaiin island and create a tribal hawaiian style pvp server based on the real world data, tribes, village location etc.  Dunno, just a cool feature.

Only issue I could see is would you import a fairly large heightmap as the basis for the 'project', and chose to divide from there, or import the heightmap for each separate map you build. Each has various pros and cons.