C'est moi in the impressions thread - as far as I can tell they do not mix.
Terrace farms do, however, get the same bonus types farms do at those techs - +1 food for 2 adj terraces at feudalism and +1 food for each adj terrace at repl. parts.
They graphically mingle with regular farms, which is super cool looking. It's unfortunate because it means building the odd lone terrace (say, one hill next to a river for the freshwater bonus) is often a bad idea. Beauty is pain, sometimes.
That said, terraces will give you so much food it's almost not even needed to have them work with farms like this.