Personally I always use the Decimate modifier. On your mesh, a factor of 0.4 brings the vertex count below the limit while keeping a fair amount of details.
In my Canyon Age, I also split the mesh like you suggested, but instead put folds between each piece. Seen from the top, this is what it looks like:
This works well because it's a cliff already so it gives the illusion of cracks in the rock face. Not sure it would look as good on a flat terrain.
The original mesh looks like this:
Which, after a subsurf+displace+decimate modifier, gives the following result:
The subsurf+displace+decimate combo works well to quickly create the illusion of a detailed terrain, and I've used it a LOT. With that said, using Blender's sculpt tool with dynamic topology, while harder, leads to even better results