Can I expand tilesets like for example say I have a forest and a desert tile set can I combine the two into one tall one and use that as tile-E?
No, you can't (unfortunately). The sizes for the tiles are set.
You should try using this: SwapXT (http://rmrk.net/index.php/topic,33095.0.html). It will allow you to use more than one set of tiles. :D
Thank you.