doing collision testing for circles is apparently complicated. I'm learning about hittests now actually, and from what I've gathered, making a square bounding box around your object and using that to test with is the easiest way to go.
Here's how to do collision testing, step by step:
1) determine the direction that an object is travelling
2) project an image in front of the object using whatever bounding points you have in that direction (for a box it is 2 or 3. For a circle it can be 20 or more... unless you use Vectors, but testing between circles and oddly shaped terrain using vectors is very confusing)
3) test to see if the image overlaps whatever you are testing against.
4) if so, react to it! In the case of a bouncing object, create a virtual 'flat plane' at the point where the object comes in contact with the ground and calculate a new trajectory as if it bounced off of that flat plane.