Hills are beneficial regardless of race course. They are even beneficial for track races, where the biggest “hill” is the 1-2 inch high rail on the inside of lane 1 of some tracks that you have to step over before or after the race to go between the track and the infield.
As for fitting hills into a Daniels plan, if you read his book carefully, you will notice that he mentions the possibility of doing your repetition workouts as hill repeats. If you want to stick with Daniels to the letter, I’d suggest doing this. If you are willing to tweak, I’d say consider doing a tempo run over a hilly route or if you do your intervals in the form of a timed fartlek, do that on a hilly route.
I do believe in working hills into as many runs as possible. You don’t have to run those hills hard, all you have to do is get up a hill or two during the run. Simply overcoming gravity, regardless of pace or effort, should be the goal on these runs. There might be a slight effect on recovery at first as your legs have to build the strength to run hills but, once you are used to the hills, they shouldn’t affect your recovery to any meaningful degree.