Making hills for developed areas is remarkably easy. If you want to build buildings on your hills, don't do it any of the ways detailed above:those are for undeveloped areas where you will actually see the hills themselves.
What you want to do instead is first set up your street grid. Then determine where you want your hills to go and push-pull the intersections of your street grid to mimic the contours of your hills. Then putz around with the streets themselves and make sure each intersection is connected by a street. The actual city blocks will stay in place below where your hills are, but this makes it far easier to develop.
All I did to fill in the empty blocks and make it look like continuous terrain is draw a line from one corner of the block to another so it covered up the flat, empty lot.
If you're going to do hills like that, might I recommend you simply do your city on a pure grid? The crooked streets of the Old City in CCII took several painstaking hours to give terrain to.