As long as one won't experience performance drops in such zones and as long as those models don't get bugged collisions (like sometimes happens in Noggit when it comes to bigger models) it looks pretty cool indeed. I have been experimenting with basically the same system as well earlier and it was quite tedious, so GL with it.
Tbh, I am quite sure it took me much longer to spawn those rocks there than to texture and model that terrain .