The tile-blending explains the... odd appearance, then! Why not make transition tiles? Using cross-fading doesn't help you eliminate the blocky, obvious boundaries between different terrain tiles, so it's about as good as just putting tiles right next to each other with no blending, the only benefit is it's not quite as harsh. I think if your goal is to avoid a harsh blocky look, you should put in the time to make transition tiles that help break up the blockiness. If you're smart about it, you can make tiles that can serve as transitions between several different terrain types instead of making transitions for every terrain pair. Another alternative is to use two layers for the background: a base layer, and a transition layer made up of overlap tiles that create transitions by overlapping the tiles beneath them (with no blending effects, just strict transparency). Then you can have your vertical elements on top of that.
Your various vertical elements also appear to cast shadows in two different directions.