This shader only allows normalmapping, parallax/displacement mapping is not supported. And Yes, theoretically, you could have unlimited textures for such a terrain shader.

I didn't meant Photoshop, though, you can do this by hand with it, too. An application I had in mind just takes in the filenames of 4 textures and their corresponding normalmaps -- and ensembles the encoded RGBA images. Like a console application or so. This way, you can simply press a button - and voila! - you have it.