Terrain.fx inverted LOD lighting

the terrain shader causes the world lod lighting to invert, making shadows where there should be highlights and highlights where there should be shade



above image is with terrain.fx enabled



and this image is with the shader disabled

of course this problem only affects LOD's, the area surrounding the player is fine


in my experience this bug has been present in every iteration of oblivion reloaded and as such I had always avoided using the shader - that is until now

now the real time shadows in v7.0 are reliant on this terrain shader and I cant go without using it


please explain how to fix this, or remove shadow dependency from terrain.fx