First of all: the new Terrain Generator is a huge improvement, great work!
[hr]

And reordering the way things are drawn in the plan is a big development, and I’m not sure I want to change the current simple logic. You can also draw a room for your terrain which doesn’t include the walls or the house of the walls.

I have a path through my terrain that swings all around so I use walls to create those. Manually drawing them would be a nightmare. That a room can exist without walls is a good thing for terrain building: after creating the paths with 0.1 thick walls and creating the rooms (including the 'path room') I remove the walls and create the terrain using all rooms. The result is that I have a path with a different texture that nicely follows the terrain elevation up and down, looks great! If walls were a requirement for a room to exist that would not be possible.
[hr]A test showed that a 350cm high wall hides under a 90cm high table [:))]
I never realized it worked that way but it does explain why walls don't show through the terrain. It's based on elevation but doesn't take the height of the object into account for display in 2D.
As a workaround I'm thinking about a way to create a top view image of the terrain and set that as the texture of the room after hiding the terrain object. It ruins the 3D view but it is a way to see the terrain contours in the 2D view while designing without hiding the walls. Or maybe an extra level 1cm higher while designing and when finished lower it to the same level. I'll have to experiment with that.