Loffy
With Terragen you basically create a landscape complete with sky and you can take 6 seperate snapshots that the quake engine can stitch together to form a nice skybox. You wouldn’t be able to import images like that into Terragen, but you could try and recreate the effect because you can alter the clouds, water and landscape. I think it would be very difficult to produce a sky that looked like that but it might be worth a play.
There was a tutorial i found that was step by step on how to do it but its gone now links dead.
(seems i was beaten to this thread slightly)
<DJ>
edit ( here is page with that script as mentioned above http://developer.valvesoftware.com/wiki/Creating_a_2D_skybox_with_Terragen it is aimed at source engine editing so ignore last part but rest is all stil valid.)
edit edit ( also the size of 1024 x 1024 maybe a bit large I allways go with 512 x 512 )
edit edit idiot ( this is a link to a thread where Mr Lego has poted a test map with terragen skybox it may help you figure out how it all works and where everything should go, right i promise no more edits now http://www.splashdamage.com/index.php?name=pnPHPbb2&file=viewtopic&t=7714&highlight=skybox )