Nice. How do you intend on modeling the stuff in the far corner? And was there a certain method or knife you found yourself using more during the foam cutting process?
The area between the green lines is going to be a tunnel, so the top corner will be built up a few inches higher than the top of the tunnel then shaped downwards toward the town. I just haven't gotten around to actually doing that corner yet.
As for what to use to cut the foam ... really, any sharp modelling knife or exacto type knife will do, it does cut very easily. I also use an electric Hot Foam Cutter to get the fundamental shape of the landscape that gives me a guide for the thin layer of plaster that will go across the top of it all and will shape out where it meets the "flat" terrain. The hot foam cutter does save time and is a bit cleaner than trying to cut things with a knife.
The knife I have is a complete set (Speed Hex) from Hobby Lobby. It contains five different type of blades and 8 various screw bits, which come in handy for doing any wiring. From memory it was only around $30 for the set and you get 5 blades for each type of blade. All in all I thought it was a good deal and is the only knife I use.
http://www.amazon.com/Speed-Hex-Screwdriver-Precision-~SH20~/dp/B00CDXU06Q
I don't have a method as such. I make a rough measure of the size of the piece of foam I need then "hack away" and trim as needed. You could be more precise, but as I use the plaster to fill in gaps etc, I am not to concerned about absolute precision in cutting the foam. When using foam to form hills etc, I layer the foam on top of each other making each layer a little smaller as I go higher to make it easier to sculpt and so as not to have too much waste.
I also use 1" foam as a "base" for the landscaping and build onto that. That gives me option of going "down" as well as up and helps when it comes to rivers, lakes and ponds etc.
At the end of the day though, where I am concerned, it is a bit of trial and error. The one thing I will advise is NOT to glue anything in place until you have everything in place. It is inevitable that some things will change as you put your layout together and there is nothing worse than having to try to remove bits of foam that have been glued. That is something I am going to have to do with some of the risers I have in, cut them out and re position them so they sit centrally beneath the track. One of the joys of changing your layout halfway through
I should add here that I am no expert on doing any of this and what I have explained is how I do things and what works for me, at the moment. The more you do things, the more ways you find of doing things, from your own experience and from picking up tips from others.
I am guessing that what you are intending will be your first layout. My best advice (I think) is to look at a lot of layouts here and when you see something that you like, ask the person who did the layout how he/she did it. You will find some people are brilliant with track plans, others with building bench work, others when it comes to painting and detailing and so forth. I just want you to know that there are others who are better than I at doing layouts from the ground up and who might have better or different advice.
With that being said though, I am more than happy to help you in any way I can - that's all part of the fun of being in this hobby and we ALL had to start some where and ask someone for help at some point
Cheers and hope this helps,