Terrain height just changes the Y position when where you draw. Draw order is still the same. The formula for tile map space to screen space is:

scrx = mapy16 - mapx16;

scry = mapx8 + mapy8 - GetSurfaceHeight(mapx,mapy)*12;

IIRC, this assumes origin is in top most tile, with increasing Y going down. So each step the terrain increases, you move the tile you draw up 12 pixels higher from the lowest point.