This 3-parts tutorial explains how to generate an island environment with Blender 2.6 and the ANT Landscape Generator, an add-on for Blender. Though not all of what is explained in the tutorial can be applied to Second Life, this tutorial is nonetheless useful to learn a number of techniques on how to model terrain with Blender.
Nearly 3 hours in 14 videos, walking through the process of using Blender 3D to create low poly terrain object models. Click the link for the full article.
World Machine is a terrain generator that can generate .RAW files for Second Life. World Machine Original grew to become a highly popular application for the creation of landscapes and realistic looking geological features. World Machine 2 builds upon its predecessor and introduces a great set of new tools to enhance the way you create and texture your terrain.
A tutorial on how to create .RAW terrain files for Second Life and OpenSim with Terragen. Click on the link to read the full article.