First, create a nice mountain range and decorate it however you like. (I don't have pictures to illustrate how to do this because most people already know. If you don't, please check elsewhere.)
You can either create a small stream or a pond in which the river will flow into from the mountains. I chose a pond. The pond was suitable in my scenario and it provides healing for injured troops (this was done with an entirely different trick, mind you, and we won't be getting into that).
After you've created your pond, use Paint Terrain to paint Black Rock and Coral to create the illusion of your hole. Have the black rock peek out from the water just a tad (this creates the illusion where the blue water fades into black). Use the Raise/ Lower Elevation tool to lower the elevation enough so that your hole appears to "bulge" out from the mountain. Place rocks over the ledge and around the hole to beautify the hole. The shadows of the rocks may drape over the black part of the hole. This can create an illusion of moss hanging from the roof of the hole if done correctly.
Now decorate your pond depending on your environment or however you desire. (I made mine marsh-like and added plenty of seaweed, turtles, trees, and rocks to beautiful the pond.)
Here's what my hole looked like when I finished: And at another angle (so you can see the rock formation and bulge). I didn't spend much time beautifying my entrance (I haven't finished the scenario yet), but I assure you that you will like how it looks when the scenario is complete. (And this trick is only one of many surprises.) Here's my tunnel entrance:
Now you must create the entrance to where the river flows. To do this, I used the Mine Walls, Tunnel Opening, Boulder Rolling, Boulder Rolling Small, Granite Rocks, and Boulder Walls. I also used the same terrains that I used to create the hole with.
I hope this "guide" helped you. I know I didn't go into much detail, but if you have any questions, ask them and I'll answer them as best as I can.
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