Is tree placement based on another realistic algorithm?
Not really, it's just a noise function with some appropriate parameters that make the trees group together a bit. The terrain height is also used to decide what kind of trees grow at the different altitude levels.
Would your erosion algorithms handle different terrains equally well...like a desert?
That depends on what you expect it to do
It's not physically correct erosion in any way. The primary function of the erosion algorithm used in TT
is to ensure that all areas of a terrain are accessible via paths that do not exceed a certain inclination, i.e. units must be able to move around without having to climb steep cliffs.
Are your textures created procedurally?
Yes, all terrain textures as well as the ocean and clouds are generated runtime using a mixture of perlin noise, voronoi maps, perturbation, bumpmapping and a bunch of other tricks.
Whats your opinion about the future of procedural texture companies like Allegorithmic (ProFX)?
Allegorithmic has some pretty impressive development going on, but I think procedurally generated content makes most sense for online distributed games like TT. I mean, why bother compressing a 4 GB AAA game to 1 GB when it still has to be distributed on a DVD? Then again, Valve's Steam concept might change that in the future...