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Correct.

They are Terrain, not effects, so they stick around.

I use this as my pair of crews for demos, and they've worked out very successfully. Taking morale duels out of the equation is one less thing you have to worry about teaching people. I also don't...

I think so. It depends on what the strategy is really. You are very rarely ever going to get Terror to work effectively in any case, so the fact that it doesn't work very well in a demo game isn't...