Pin Art like level generation

Hey there,

Imagine the following, you have a huge empty area like a cylinder, the gameplay takes part around the cylinder on the outside, the actual background level used for narrative and atmosphere is located in the cylinder. Now the further you move around the cylinder the object in the center changes its shape to give the player the feeling that the world is constantly chaning eventhough he is acctually only walking around a circle.

To achieve this I tought of creating a system based on how Pin Art works. https://www.google.de/search?q=pin+art&biw=1449&bih=955&source=lnms&tbm=isch&sa=X&ei=yqQ_Vbf4BebC7ga3koHwAQ&ved=0CAYQ_AUoAQ

However I have no clue where to start, I assume i would need to create an array of pins, use somehow a height map to determine how high every pin should move, which would require that i would somehow need to create a grid for the height map as well ?! I assume...

Anyway wanted to here you thoughts on how this could be achieved.