This function will handle the blending for you:
Function BlendTerrainTexture2(terrain:TTerrain, x:Int, y:Int, h:Float[])
glBindTexture GL_TEXTURE_2D,terrain.alphatexture.reference._index
glTexSubImage2D GL_TEXTURE_2D,0,y,x,1,1,GL_RGBA,GL_UNSIGNED_BYTE,[byte(h[0]*255),Byte(h[1]*255),Byte(h[2]*255),Byte(h[3]*255)]
EndFunction
The h parameter should be four floats like this:
[0.0,1.0,0.0,1.0]
...or whatever values you want.
The problem is this is a feature no one ever uses, so an error was overlooked and never addressed.