In the Philadelphia example on ESRI's site, it appears as if they use a base map (looks like an OSM basemap) rather than an ortho or satellite image for the terrain. Is it possible to use a basemap similar to the one used in that example, but without a heightmap file? The terrain for my scene distorts my buildings and roads even after aligning to terrain and the location of the scene has no major elevations anyway, so not having a DTM/DEM wouldn't be the end of the world.
Yes, that is possible. When importing the map you can use the 'flat.png' map which ships in the ce.lib project.
But instead of using a terrain, I'd then use a 'texture map layer' which does not create lot of polygons as a standard 'terrain map layer does'. Loading an image in the texture map layer settings should properly read the georef information.
Is it possible to use a TIN model for a surface? Say... a TIN derived from a bare ground LiDAR model. If a TIN cannot be used, is there a workflow to convert a TIN to a heightmap that is recommended?