The one with the correct perspective obviously looks more natural, but you're right when you say it's a shame to lose the horizon...
In the SNES game Secret of mana, on the "Lofty Mountains," they actually did both; on the way up the mountain, the perspective is correct, and you're looking down at the trees. On top of the mountain there's a cave. After you leave the cave, the view of the background starts higher up, and you can see off into the horizon and the sky. It obviously made no sense, but I was amazed at how how high up I actually was when I was a little kid. =)
I'm running into the same problem with my game right now, but if I had to choose one, I'd probably go with the horizon, even if it's technically wrong.
See if you can find any pictures of Secret of mana for reference. Link to the past also let you see the horizon when you were on top of the golden pyramid in the dark world. I thought that was a cool view, too. Then again, the view from Death Mountain was pretty awesome too, and it was in the correct perspective. Depends what you want to show, I guess. In the end, players will be much less bothered by an incorrect background perspective than your fellow artists will - and I don't think most artists would mind, either, as long as you gave them a good view. RPG perspective makes no sense anyway, right? =)
That said, I don't know if your background is working with your mountain. It worked in Secret of Mana, because the mountain was huge compared to its surroundings - all you could see was an ocean of flat green forest leading to the horizon. It was easy to pretend that the perspective worked with a background like that. Your mountain is surrounded by other mountains, though, which makes it obvious how wrong the perspective is: rather than looking like a 3/4th's perspective, it looks like we're looking straight on at the horizon now, with your mountain jutting out of the mountains in the background toward the screen. I don't think your background works, because it's too 3D.
Something flatter like in Secret of Mana or Link to the Past would work much better, I think. Is this actually how zoomed out your camera will be? Or will you be pulling it closer to the action in-game? The camera being zoomed in more helps hide the errors inherent in RPG perspective too, I think.
