Base Map Distance for terrain

I am using a GeForce GT 430 with directX 11 and shader Model 5.0. I updated to unity 3.2 build 61061. the install went well but when I opened a new project and added a new terrain I got this weird gray box overlayed on the terrain and it took about 5 seconds to go away. I then started to edit the terrain and it reappeared and again took about 5 seconds to go away. After researching what was causing this I found that if I change the base map distance setting for the terrain a graphic representation will display on the terrain and will increase or decrease in size accordingly and will go away after 5 to 10 seconds but again will come back with any update to the view port. I found two possible work arounds for this:P

  1. set the base map distance to zero
  2. set the graphics emulation to directx 7 or shader model 1

With sm 2, 3 or no emulation I get the same behavior. This did not happen with the previous version of unity. can anyone else replicate this or is it just me. Or is there some setting to turn this off. its very frustrating to work with the editor when my terrain object goes black when I try to do any editing

Screen shot of the base map artifact with any update to the view port:

This is what it should be and after a few seconds:

I have the same problem, and just did the same thing with the base map distance. I also only have this happening in 3.2. I have no clue why, and I agree its very annoying. What is the base map distance for? if I put it to zero what else will it effect?