I've been playing with the mod and noticed that we don't seem to be hitting any solid biomes and the ground is essentially a rainbow as each biome is a 3-8 block strip. Based on the images for the mod it appears that I should be seeing larger biomes. Out past the 400 tile mark and haven't gotten any solid groupings of resources. Are the biomes intended to change this much or did something go wrong with how my group loaded the mods?

Nothing went wrong with the way your group loaded the mods. This happens because of how The Cave generates terrain. On a normal map, the biome system generates and distributes terrain across a very large continuous area. In The Cave, mining rocks reveals and generates only a small area at a time, roughly around 40×40 tiles.
Because the biome generator is being applied to these small sections instead of one large map, its terrain variations become compressed into narrow strips, which creates the rainbow-like appearance you’re seeing. Travelling farther from the starting area won’t change it, because every new section is still generated in the same small increments.
Unfortunately, there isn’t a simple setting that can fix this. It would require a separate custom biome-generation system designed specifically for The Cave’s incremental terrain generation.