I understood this to be a planned feature for terrain from some time ago, where faces could be removed under buildings etc to allow for exactly what you are asking. I was getting kinda confused by answers myself which said you would be adding faces to terrain for this, when your actually removing them.
To me it is unlikely that reloaded terrain would ever add faces to what is already a massive count, but what would and could work better, if possible, would be for smaller areas of terrain which could use an increased poly count to create more detailed terrain areas. If I want to use a quarter of the map you could double that face count and still make a saving on poly's, by removing all unwanted terrain. I know this would mean more faces in render view but with proper culling and smaller LOD ranges this could still be very workable.
Even the current feature to remove terrain from render to increase frame rate, (this doesn't remove the terrain or collision with it) might be expanded upon to use areas instead of entire map. Removal of entire areas from render could have a similar effect...all the same the increase (quadruples my own framerates) doesn't remove the faces themselves so the saving is in the render cost obviously.With all texture channels and a heavy duty shader removed from the equation this is not surprising, but tells me poly count is not the real problem for performance here..
Whatever, some kind of boolean function to cut away areas of terrain is in fact required and not too much to ask for.
A funny thing happened on the way to the forum...