So, I'm back and feeling in a generous mood. The simplest way to do this via scripting is this.
function hide_terrain_init(e)
HideTerrain();
end
function hide_terrain_main(e)
end
Attach this script (save it as, hide_terrain.lua) to any non static object and it will hide the terrain. That should work, it hides the terrain once on init and does nothing else. You do not have to worry about a zone, just place the object within range. You don't have to worry about a range if you set it as always active. But for this, I would just have the item close when you spawn. Setting something to always active is resource heavy.
I normally do as above and give the answer in a basic form, but as it really is simple to do, thought I'd quickly throw up some code. You can set other features at the same time if you wish. Want to hide water? Add HideWater(); after hide terrain. This is a simple way to set up your game/level as you wish at the start.
On a side note, if you wanted to keep the terrain visible but transparent for some reason. You should create a new terrain texture and set the alpha to be opaque. Not an option in the IDE, it involves a paint package and a bit of time sussing the existing terrain format out. That way you should have a transparent terrain. Not tried to make one myself, but figure it must be possible.
SPECS: Q6600 CPU. Nvidia 660GTX. 8 Gig Memory. Win 7.