I'm surprised that this old thread came back to live.
I haven't done anymore work on this small diorama since I finished the tracks, no scenery or anything. Once I had finished the track practicing I decided that I could go on with replacing some track on the real layout with C40, so that's what I have been doing instead. I have some pictures here
http://community.webshots.com/user/jkristia, but the progress has been slow for that last couple of month, and will probably continue being slow until later in the summer (it's too hot upstairs now).
To answer Ray's questions.
I use the PC ties from Clover house
http://www.cloverhouse.com/
The rail is C40 rail purchased from
http://www.1stplacehobbies.com/
The ties are Micro Engineering, also from 1stplace
I am using some roller-gauge from
http://www.railwayeng.com/gauges.htm in addition to the NMRA gauge.
I solder the rail to the PC ties, so an solder iron is a must, and I use the Dremel tool to cut gaps in the rail and ties.
I haven't had any problems with any of my (I only have a few) locomotives or cars on the C40 rail, even with the regular MT wheels, but since the rest of the layout is Atlas C55, all my cars will eventually have their wheels replaced with low profile wheel.
I would really recommend anyone who is considering hand laying to give it a try. I just love it, actually, right now I'm doing some scenery and structures, and I just can't wait to get back to do more hand laying.