Are there any alternatives to voxel based terrains?

Such terrain should be fully destructable, allow for arches, overhangs, preserve sharp features where needed and keep consistent topology.

Maybe you can explain the problem that makes you ask this question? Voxel based terrain is basically just using a 3D grid of data to store data. There are lots of ways to render that data, but it doesn't get much simpler for storing it. – Byte56

Current isosurface extraction methods aren't most effective/bug-free.

Cubical Marching Squares seem to solve most of the issues, however it is a relatively new method and there aren't too many resources about it. (I've found single university paper)

Even if we stick to CMS, when we want to add multi-material support, we can either divide surface into multiple meshes, or pass a texture array or texture atlas to shaders, then we are limited to set amount of textures and additionally increase memory-usage alot.