Landscape Generation
Please note that this was originally posted on Jan. 23rd, 2008 in the Bethesda Game Forums - Landscape Generation. It may be better to continue the discussion there, at least for a while.
Tools
The only tools you need are TES4qLOD, just unpack that into the Oblivion\Date folder. I'll explain how it's used in a minute, and TES4Gecko, another useful tool.
Prestep
Start TES4Gecko and click 'move worldspaces', select your plugin and proceed with that, once done go to step one.
Step One
The first thing I do to ensure no mix-ups in the files is delete all of the current LOD data for my worldspace (if any have been generated by you).The folders you delete them from are, Oblivion\Data\DistantLOD (yourworldspace.lod files), delete the heightfield in the Oblivion\data\Heightfield folder(yourwoldspaceOverview), next is the landscape meshes in the Oblivion\Data\Meshes\Landscape\LOD folder(.NIF files) and last is the LOD textures in the Oblivion\Data\Textures\LandscapeLOD\Generated folder(DDS files). If that makes you nervous, just don't empty your recycle bun right way. The only files you will see in these folders are things that have been generated by you, so you don't have to worry about any game files except your own previous LOD files(if any).
Step Two
Now its time to open the CS, once you load up your plugin, click on the 'World' tab at the top and scroll down to 'Heightmap Editor' and click it, choose your worldspace. Once you have opened the heightmap editor click the 'View' tab and click 'regenerate overview' and click yes on the window that pops up. Nothing will appear to happen, now save the texture (this will take a minute, depending on size) by clicking the little floppy dick, once it is finished saving, click the 'file' tab go down to 'generate LOD' and click 'full'.This will begin generating .lod files for the land.Once you have complete this(in order) continue to the next step.
Step Three
Here's where the TES4qLOD come into play, no landscape modder show go without this. Minimize the CS and go to you Oblivion\Data folder and open the command consolen (you extracted this from TES4qlod earlier), the command you type is TES4qLOD nameofyourworldspace yourplugin.esp. If you have converted your plugin into a master just use .esm instead of .esp. If the command was entered correctly it will start it generate textures. Once completed, open up the CS again and click the 'World' tab, scroll down to 'World testing' and click 'update distant LOD data'. Once the box comes up, find your worldspace in the list and click 'Export' (this worldspace only) once its done, save your plugin, try it out and enjoy!