Ok. So the next step is to start with the default material and make 1 change at a time, getting closer to your scene material step by step, to try to find exactly which setting causes the trouble.
Substance Painter does what you want if I understand correctly: Painting and blending height data while handling specular and any other channel at the same time, with by default floating point precision.
By default the scale hotkey is set to Smart Scale. This will cycle the different scale modes. I always change it to Scale Object, that way it stays on whatever mode I've selected. Same thing for the Select hotkey.
Hey there. Have you noticed there are some letters on the Remesh All button.. those are for symmetry and by default X is active ... I am pretty sure this is your problem. Just try to deactivate it and it should work :)
I tried to bake in Painter and look what happen is like they split apart even though I only have two material ID. note that every baked setting was on default except diffusion.
Try decreasing the bias of the light that's casting shadows? I think it's 0.05 by default, 0.01 might give better results (at the expense of other glitches, but generally they can be easier to cope with). It's a tricky thing to balance.
The weird artifacting in the last shot looks like it might be from a Light Map that is too small. I believe the default is 32, you should try bumping it up to like 512 for something of this size.
Also try to use a different matcap. The default one looks really bad imo and it doesn't tell you the true depth of your mesh. I would recommend using a matcap called zbro_Modelling_Clay
OK i decided to go aways from the real reference, so started to play with the level blockout. Also, trees and bushes are from default UDK assets, I'll make my own later on.
Viewing the default checker pattern in High Quality mode will make it nice and crisp again. If you still have checkers stretching, it's because your UV shells are the wrong shape for its respective polygon.