As I said in the OP, I am no stranger to CM and probably got CMBO* before the vast majority of people here - and I've also played and enjoyed similar games with graphical limitations (despite their age I think CC games with the top down 2d view are actually still visually appealing). I also own Advanced Squad Leader and a few other tactical board games, so I have a pretty good appreciation of simulating this level of conflict, the detailed mechanics that can go into it, and the design compromises that get made along the way.
Graphics aren't the be-all and end-all, but they are obviously important to a large part of the player base or there wouldn't be so many graphical mods and screenshot threads. For me, zoomed out views are more interesting than extreme closeups, which is why terrain is more important to me that seeing the SS insignia on a unit model's collar - but again, the content of screenshots and mods suggests that mine is a minority view.
In my OP I was mostly clarifying what I understood to be the case with the linear terrain features. I'm assuming that they don't have too much of an effect on game play.
And in terms of game play, from what I've seen in different demos and reviews, CMBN is by far the closest simulation and strikes the right command/control balance.
Maybe in future upgrades/overhauls of the engine the underlying grid will be made finer to allow for more natural looking terrain. Probably heresy to say it here, but I think CC makes the right compromise between displaying terrain (all hand drawn of course, and a lot more effort) and defining what this means on a very fine underlying grid - so you see nice curved roads, even though parts of them aren't actually road in the engine.
* interestingly, when I bought CMBO it failed to arrive, but an email to the guys sorted it out and they sent off another copy at no extra charge - this was in the days of CDs and big printed manuals, and I've always remembered that excellent customer service experience from a small company just starting out