Yep, that's a good way to look at it. Another example FWIW. I made the grass shorter as it gets closer to the rocky path. Mongrelman, we have an English translation of that on the wiki, if it helps.
Unfortunately, I have not managed to cover the aspect of placing the foliage in the 3dmotive tutorial. The general idea for getting fairly decent placement of vegetation is to try and group the foliage in a ramp-like shape. What I mean by that is that you start with the largest objects and then add smaller objects around…
There's a great explanation of how to create good game landscape compositions in the Allods Online art bible, "Creating a World in 7 Days" (starting page 13 or so) http://wiki.polycount.com/wiki/Art_Bible I used similar techniques recently to make some environment layouts, a couple examples...…