I downloaded and ran the game from http://www.glest.org, and the "feet not on the ground" issue comes from lack of shadows and other visual cues that help you get the perspective right.
In the screenshot you posted, shadows seem to be turned off. Turn them on to get a better effect. Even when using the shadows Glest provides, the shadows are pretty weak. But turning them on does help reduce the floating characters effect.
Take a look at the screenshot below I took from Glest. The models fail to visually blend into their terrain because the textures don't visually blend between object and ground, nor are there any shadows.
Now take a look at this picture. This is the same scene, but I did a quick photoshop job to add shadows and a few other changes by hand. The characters and some objects (I didn't do everything) have a dark shadow blob under them. The shadows aren't even real shadows (shaped like the object), but simply darker "blobs" at the object's base. They are also overly dark, but on purpose.
In addition to the shadow blobs, I darkened the bases of the objects (base of rocks, base of buildings, character feet) so that they better blend into the shadow "blob" under their feet.
So my advice is to add stronger shadows under objects, even if with blobs to fake a shadow. And also darken the textures of objects where they contact the ground. These are things a nice high end engine could take care of for you with the lighting model, but there are ways to still get the effect.