I have now upgraded to the recommended build of Bukkit 1.1 which uses all the facilities of the 1.1 release of Bukkit, including the terrain generation. Here is how future terrain updates will affect the server, as far as I can say now:
All “normal worlds” such as empire, kingdom, darklands etc will have scenery breaks in them when a user lets his lot expire and it it regenerated by me. HOWEVER it seems that at least recently generated worlds (empire, darklands) will not change the biomes (snow in the desert etc) when there is an update, but also never get new biomes. I regenerated two abandoned lots in the empire now and it seems as if the breaks in the landscape are not a really terrible thing. They occur only in some few corners of the lot, and the landscape generally looks the same. So I guess I will leave it as is.
All non-normal worlds (skylands and flatlands) are currently non-regeneratable. This means that if someone abandons a lot, I will have to either manually create a new terrain (for flatlands, this works quite fast) or simply leave an empty void (for skylands, same effort as the old method, but no islands in the sky) behind. Both are currently manageable, but not as originally intended at least.
For the flatIands, I COULD use the new flat terrain as you know it from the single player for the flatlands, but that terrain is at level 5 and you see the void fog there as if you dig down in a normal world until that level. Since we do not have too many users for that world, I am not really sure what to do. I can either migrate everyone to a new world and have the annoyance of the void fog (people would have to build at least one layer of soil at a higher level) or leave everything as is. You opinions are welcome there.
In the end, the story is that managing the server does not get any easier. I am still running with at least 3 plugins that are essentially abandoned and half-broken and the terrain editor seems to remain an issue for some worlds at least.