OK, it's logical that it's reverting to the global tileset based on distance, but that's not very seamless... Don't think there's much OT3 can do here.
Did you try the -i option? This feature integrates a given set of tiles backwards into lower-level resolutions.
ATM -i only works on Surf, Mask and Cloud, but with the help of ele2png, I'll try to also make it work for elevation data, meaning that you can integrate high-resolution elevation backwards into low-resolution tiles as well.