There was a great article in MR earlier this year about making a winter scene. There was a sidebar to the story about making mountains with plywood forms and wire mesh screen. Very brief, but excellent results for Rockies/Alps type "craggy" mountains.
If you are looking more for Appalachian (north eastern US) type eroded/rounded mountains, you could use layers of carved styrofoam (use the pink or blue extruded type for easiest carving). Depending where you live, you may find this type of foam in thicknesses from 1/2" to 4". It can be glued together with polyurethane type glue (Gorilla glue), provided you mist some water on one side of the joint - the glue cures in the presence of moisture, not air.
Andrew