According to a tutorial I read, you need at least 1 chunk width of camera non-routable around the edges to not see the edge. Also, distant terrain is not available for small worlds (or tiny). I've been making a landlocked world, and am just going to have to deal with the fact that You'll be able to see the sea when you zoom out.
One last thing, the camera non-routable works differently in edit-in-game to in actual game after you export it.
Lastly, if you're not against using custom content, you may be able to download a custom distant terrain.