just tested and it seems to be working fine.
The image must be added to resources and a terrain has to be created already.
Edit: Just saw your image, just wondering if it is an installed issue? Will test and let you know.
Edit2: It is working on my dev version but not working on the installed version. Did not know this was happening lol

I will fix it for the next release

Edit3: The reason it is broken is because there is no heightmaps folder lol.

Must have missed it in the first release.