Minecraft – ny fix for blocks above y-128 not being visible with a >16x texture pack

That command line allows Minecraft to use extra memory and use an "offline" player name, but does not itself fix any problems with HD textures. Make sure you have the correct mod installed.

Update: I think I just figured out what's going on. That command pulls in all the .jar files in your .minecraft/bin folder. Well, it happens that the patcher used by the HD textures fix creates a backup of your original, unmodified minecraft.jar file in that same folder, which I suspect is conflicting with and overriding your mods.

Find that backup file (it should be minecraft-1.8.1.jar if you're using the latest version) and move it somewhere else (or just delete it). I expect that will get things working again.

Dinnerbone has answered this question on reddit:

Will the terrain generator ever be updated to use the full 256 blocks of build height?

It's intentionally designed to only go as high as it does right now. Maybe in the future, or with different generators/options, but right now we're happy with the extra breathing room for players.