The elevation data story is complicated. What the OT3 toolset offers is ele2png.exe . This is a CLI tool that takes an elevation tile in Orbiter format and converts it into a PNG representation, and vice versa. The program has various options to control the mapping between the elevation data and the pixel color representation.
The idea is that you use treeman to extract elevation tiles, convert them with ele2png to PNG, edit the picture with an image editor, then convert it back to Orbiter format with ele2png. Unfortunately, this is not enough, because you have to integrate the information through the whole tree up and done, not only at the LOD level that the tile is at. And this is something neither ele2png nor treeman can do for you automatically (yet). It is also really cumbersome to deal with all the tiles separately when you want to edit a large area, especially given that you have to deal with the overlap of terrain tiles manually.
I stopped developing on this front, because Martin came up with a better approach to the elevation editing story: tileedit. This tool offers a GUI where you can edit the elevation points directly through a specialized editor, and it also does the integration throughout the tree for you automatically. In addition, there was the area flattening idea that IMHO addresses the real reason for the need for elevation editing much better: wanting to flatten ground for base objects. In reality, nobody wants to craft detailed terrain by hand, just wants to flatten the damn bumpy hills around his base.
However, with the tileedit workflow still being a bit cumbersome and the area flattening idea not being adopted, the story remains complicated.