You can make something like wooded hills with existing graphics. But, it won't look that great because the trees will cover a lot of the hills. But, underneath, you will see some of the hills. To some degree, it would be better to make new trees with shadows, etc., but it is too hard. I also think Grymme might have done something like what you are asking for his Vietnam scenario.
Anyway, one way to do wooded hills would be to clone the hills terrain. Rename it, and select it. In the Property Sheets box, select sprites. In the optional graphic slot (the second sprite) replace the hills graphic with the forest type you like (in some ways pine is better). Then you have to set PlotLast to true (just click the box). If you don't do this, it won't load the second "over" image. It will now draw the trees over the hills. After that, you'll need to load the 64 edges. Click the blue arrow by "x64". Select Fred sprite sheet, and load the sheet for the forest terrain you chose. After this, you need to the Property Sheets window and select Graphic Overrides. You then need to select the terrains the edges will go over. Do this by clicking the light blue "+" button and selecting a terrain type. Unfortunately, you have to do this for EVERY single terrain it overrides. I would prefer a window with check box by each terrain. It would speed this process up, as this is damned tedious. If you don't do this, you'll just have the hex with trees, and no smooth transitions to the nearby terrain.
For overrides there are two other considerations. In the Graphic Overrides area there is the box "z=0". This is a number that governs who gets priority when the edges overlap. This will happen when you have two adjacent terrains, say aligned vertically north-south. The north terrain will want to plot an edge along its SE edge (b6 graphic), while the south terrain will want to plot an edge along its NE edge (b5 graphic). They will overlap slightly on their southern and northern edges. The edge with the larger z value will be on top. If the edge on top has transparency, then part of the bottom will show through.
The second is that if two terrain types override each other, it will do just that. Each terrain will put an edge into the other hex. It will look stupid, so don't do it. Choose one over the other.