It only works in a new game. Unless that reset thingy Koshling wrote fixes it. I can't remember the keystrokes.
ctrl-shift-R, but I don't think it will effect this - it just recalculates player/city/trade-network modifiers.
@DH - looking at what you had to change to fix this I can't see why it would only operate in a new game. All the 'TerrainMakesValid' stuff is in the assets, and queried at runtime dynamically, so as far as I can see new game or old game so long as it was loaded against the new assets shouldn't matter