I think I was mistaken earlier about the contours being incorrect - they're actually working fine and it was my brain that was not functioning....
So I'm basin filling at the end of the erosion(with a slight slope) then keeping those basins and calling them lakes. Then it runs the contour detection and creates a nice hierarchy of contours.

It's not really important that the lakes and contours are topologically correct - I just want the lakes, rivers and ocean for collision detection, like "don't build stuff here". The contours are for this "brilliant" scheme I have...probably not that brilliant.

Polypolygons, eh? That's one I haven't heard before...I was going to do it like, polygon with no parent = level zero, polygon with a parent with no parent = level one, polygon with a parent with a parent with no parent = level two....and then the even-level object are surfaces, and the odd are holes...maybe your suggestion would be easier to implement....

Well, "nice places for towns" is tomorrow's project. So far I have this:

1) is it flat?
2) Is it not on water?(But close enough to water?)
3) hooray, it's a great place to build stuff!!!

Got any good theories on where towns tend to spring up?