Hello
The link that Devon posted is the method we're currently using to handle terrain transitions in Story of a Lost Sky.Here is an image showing it in action
http://img.photobucket.com/albums/v189/rune_devros/020-enemyrange.jpg
Our tileset demonstrating our map artist Water and Wind created the different transition tiles:
http://img.photobucket.com/albums/v189/rune_devros/terraintilesv3.png-Fawkes