So don't use an Atlas terrain
You can procedurally generate the terrain easily I assume. As for how to texture it, you can reasonably blend a few textures together and have a decent looking terrain. Google around and you'll find methods for this all over the place. Not only that, but in our case we're constrained to size so there are more options: 1) Procedurally generate the terrain textures themselves so you effectively have potentially infinite sized terrain at near 0 size (the ultimate in compression!) or 2) Use smaller textures.
Even if you don't have time to research how to procedurally generate decent looking textures and need these as pre-made resources, texture splatting with textures that are 256x256x24 for 4 terrain types + a detail texture will grant you whatever size terrain you want at around a MB. In fact, there are so many variables that one gets to play around with I really wouldn't say 20 MB is the limiting factor in this case, even uncompressed.
Anyway I pray I don't come off as criticizing... really hopefully this only encourages you!
(Of course whether you have time to research and develop these kinds of things or not given 2 weeks is a whole other issue. I have no idea what Torque is capable of out-of-box, and I can't say I'd personally try it with such a short time span).
God bless and good luck!