This minimum level also works as a penalty so a level 4 railroad in mountains will only effectively work like a level 1 basic railroad.
Although I love the rest of what you are doing with railroads, I agree with an above poster that this is not how I would represent that. With the required tech(s), a railroad through the mountains shouldn't be much slower than a railroad through less hostile terrain.
The massive costs of building tunnels and bridges for the rail line through mountainous provinces should instead be represented through much higher upfront and maintenance costs.
Something like a base cost for plains, 1.5x that cost for hills, 3x that cost for mountains etc.
Are railroads in the expansion going to be regarded as an investment by capitalists, and need to pay their way for capitalists to build them? Currently capitalists just seem to build them anywhere and it doesn't seem like they take into account whether the railway will benefit factory throughput or not. The terrain additions won't be able to solve this alone, I don't want to see capitalists build railroads from one almost empty and factoryless plains province to another.
Capitalists should only really be building railroads where the benefit to factories will outweigh the cost.
They shouldn't be building railroads, for example, from one side of Russia or America to the other. Strategic railroad building such as that should need government involvement.
On another note, semi related to railways, in either this expansion or a patch could you change the province building interface so that either;
multiple province buildings (railroads, ports, forts) can be built at once, or
province buildings can be queued and cancelled.
It is very annoying when you want to build a naval base somewhere and the capitalist ai constantly starts building the next level of railroad before you can.