FreeGameDev

Is there a way to paint on different sets of textures, say I have two seamless textures and want to paint one for the grass and one for the road? Also is there a way to make a good transition/blend between two textures so its seamless between the road and grass?

Yes, there is an easy way.
If you don't mind refrain from normal maps and/or gloss maps (which don't improve a basic terrain anyway) you can use splatting.

Hi

It's a very common problem in every video games and there is no easy solution .

One of the way is to do like XGhost described with splatting. However splatting can be a costly shader). It should be only for polygons who are in a transition area. Unfortunatly there is no way yet to automate this process.

The other solution is to have 3 textures. One with the grass one with the road and one with both. And UV uwrap the polygons in a way that will make them fit together. This can be very time consuming

The third option is simply doing nothing. Actually newer tracks (like candela, cocoa temple, grand paradiso) have almost NO smooth transition yet with the amount of details/objects/vegetation/etc) it's not very noticeable. In many games they "cheat" like that.

I would say, choose wisely. But don't worry too much. If there is enough objects/details people generally don't notice too much)