I don't advise using the lasso or paint functions because they create landscape tears along the edge of their area of influence. That's a consequence of forcing a pixel to be a certain color regardless of the color of the neighboring pixel. Here's how I would do it, assuming I was using a full 4 quads:
0. First, http://www.truancyfactory.com/images/misc/colors.png. You want to keep the color bands around sea level (or whatever level is your base level) narrow because small variations can lead to impassible terrain very quickly. The default colors are useless.
1. http://www.truancyfactory.com/images/misc/noise.png. Sea level is 4096 so set your base level a little above that and use the amplitude to create ranges around that. Your frequency determines how busy it is.
2. http://www.truancyfactory.com/images/misc/raise.png. Use a big brush and raise the land. It will preserve the noise.
3. http://www.truancyfactory.com/images/misc/lower.png. Make a smaller brush and lower the land. This will also preserve the noise.
4. http://www.truancyfactory.com/images/misc/smooth.png. Generally, you're going to want to flatten living areas and use a smooth closer to the mountains. This image shows the settings for a gentle flatten brush. Even on low settings, use with care!
5. Don't forget to http://www.truancyfactory.com/images/misc/preview1.png to see how your landscape is progressing. I use the preview window after each step to check on the heightmap's progress. It's very hard to visualize changes in 2D.
6. When you've got something you like, make sure you http://www.truancyfactory.com/images/misc/preview2.png. This one used 4 on default settings, I think.
This entire process took maybe an hour. If you spend longer on it, you'll get something much better.