Terrain Following with Multiple batteries

We have to be safe with the return to home height. We can't have it fly up and over a hill away from the home point and then be set to come back straight into the hill... That would be bad. Instead, the only real safe thing to do with the RTH height is to set it to be higher than anything in the area since a return to home event can happen at any time. 

But on the last battery that is a controlled ending to the flight so it knows the terrain for the entire path. It is returning to home but it is not a Return To Home event like running out of battery. 

What I'm confused about is that if the drone has the entire DEM for for the project for terrain following, why can't it just use that to fly back after the first battery like it does at the end of the project?

The drone doesn't have the whole DEM, the app does. And if the aircraft is up and over a hill without a signal and an RTH event occurs you really want it to default to the highest known terrain plus a bit or it isn't going to end well. The RTH value gets set on takeoff. Anything after that is not guaranteed. 

Look at the RTH offset setting. You can set it to just 10m above where you were flying which shouldn't matter too much unless you are in really rugged terrain.

I guess what I am confused about is if the app has the DEM uses it to fly back home at the end of the flight why can't is use it for a RTH event to fly back home on a battery change?

The app is not flying the aircraft. The aircraft is following the waypoints that are loaded on the ground. If it has to come home without executing all of the waypoints it doesn't know what is between that location and the home point. 

When the aircraft is in RTH mode it does three things: fly at the predefined height and fly in a straight line to the home point and land. 

If it is really a big problem for you it sounds like you might have to program smaller flights that you know can be done in one battery.