There's still not out-of-the-box support, but I don't think there's anything fundamentally preventing it. There are two hurdles:
1. CesiumTerrainProvider uses a format that supports a minimum height of -1000 meters below the ellipsoid. This is NOT a limitation of Cesium's terrain engine in general, only of CesiumTerrainProvider in particular. It would be straightforward to create an updated version of it that eliminates this limitation by, for example, using four bytes per height instead of two or by adjusting the height (currently -1000 meters) from which terrain heights are measured. If you haven't already seen it,
this page describes the format loaded by CesiumTerrainProvider, and the source code for the provider is
here. I linked to line 58 in the source file, where the height offset and other characteristics of the terrain data are specified.
2. Cesium uses
horizon culling to skip rendering tiles that are below the horizon. With terrain that is supposed to be substantially below the ellipsoid, this could end up erroneously culling tiles that are, in fact, visible. A quick solution is to just disable horizon culling entirely. That check is
here. Comment out that line (actually the entire if block) and Cesium will no longer do horizon culling. There will be some performance impact from this, but it shouldn't be too bad.
Kevin