Ok. I've reloaded the data and restarted the Test Server with a minor change to the terrain checking function.
Please check this location again and let me know if you can still lower terrain at that wall location. I tried for a few minutes and it's properly blocking the terrain change for me.
Tested at 781:213.2,632.3. Could not lower spot and did not gain dirt.
Half a step to my left at 781:213.24,631.93, was able to gain dirt w/o lowering terrain where I was standing. But terrain to my left was lowered.
I checked it out and looks correct. In the second case, lowering was only partially blocked by a building. As long as the terrain lowered was not under a building part, it's working fine and as long as some terrain is lowered, you will gain dirt.