We’ve sort of thrown this idea around before, as a suggestion rather than a mod. Rolling Hills and Natural Slopes
Most people agreed that the smaller steps didn’t work very well with the game’s style, so you’d have to look into more drastic changes to the shape of things like hills and plains. It would probably mean using small generation steps all over the place, otherwise the rolling hills tend to look more like stacked layers of cardboard.
If you’re going to play around with it, though, I’d be very keen to see what you come up with!
As far as your other questions, I doubt that the shape of the terrain will effect much except meaning you’ll need to re-work the whole map generation sequence – for example, having less sheer drops shouldn’t affect water performance but will almost certainly effect where water can generate (since it needs a solid border to prevent flooding, it can only spawn in large-ish flat areas), and if you do release water onto those rolling hills it will probably have more calculations to go through before it settles.
I have no idea about whether you can do a global change to the map generator, but I suspect you’d want to avoid that anyway. I’d suggest you talk to @BrunoSupremo, who has created a lot of awesome biome mods – I know he’s played around with the terrain generator itself as well as the per-map generation, so he may be able to point you in the right direction.