There are no untextured hills, the problem is video drivers, and hardware configuration.
Draw distance can be set as high or as low as the user wants. If you set it to the maximum on PC the trees appear as far as you can see, pretty much. On Xbox, since you cannot mess with the sliders, there are some instances where they seem to jump out of nowhere, usually when you load into a cell and the trees in distant cells are processed.
One of the biggest problems with this is that it hits you RIGHT as you come out of the first dungeon. The positioning of the exit was so that you're looking up at an enormous cliff where there should be shrubbery and trees concealing the LOD textures. Unfortunately, if you have your LOD set low, you get to see the "low process" textures in the distance. That is one of the primary reasons it hits people right away, unfortunately.