I really think Autodesk’s 123D Make is the go-to program for this. It’s free, and it does an excellent job. I’ve been playing around with it, in anticipation.
Here’s a model of the peak of Copper Mountain, Washington. The first picture is the raw model, and the second picture is after slicing at 1/8" in 123D Make.
And here’s a model of Portland, Oregon, again before and after slicing, this time at 1/16".
Not that I’d ever build the Portland model, not with over 3,500 parts, most of them unattached. I was just testing what the software could handle. This model has around 170,000 vertices.
The source for the data is here:
http://www.opentopography.org/index.php
The data is sparse unfortunately, but high quality if available. I liked the interface because it allows you to zoom in and use a selection rectangle. It can then export just the data for the area selected in DEM, LiDAR point cloud data, and various other raster formats. It’s free, but there’s a limit to the amount of data you can select, and you have to give your email address so the service can notify you when the files are ready. It warns it can take up to an hour, but I just stayed on the page and the data was ready in under a minute.
To convert the data to an STL file that 123D Make can import, I basically used a technique I found from this blog post:
http://www.the3dprintedfuture.com/shapespeare/?p=1
The post itself isn’t too helpful, it only outlines the steps with no details. However, the .pdf file linked in a comment by Gregor Luetolf is pure gold. It details all the steps needed to convert the data using mostly free applications. The only one that costs money is AccuTrans 3D, and it’s only $20.
I basically followed the steps in the .pdf, but I didn’t use the Qgis application. Unstead I downloaded LiDAR point cloud data in LAS format from the link above, and opened that in 3DEM, skipping the first and second step. However this resulted in some very large models that 123D Make couldn’t handle. I had to open the models in ZBrush and use its Decimation Master plugin to reduce the polygon count. But I think you could play with the settings in the conversion programs to get smaller files, particularly AccuTrans 3D. I’m going to continue to play with this, and I’ll post back if I come up with some better settings or a better workflow.