It's depends. One of our developers has an nVidia (I have an ATI so, I can't really test it), and he said it doesn't make any difference on nVidia so, apparently, it's an ATI bug.
In any case, what this setting does if enabled (on the ATI card) is to make entire sections of ground tiles becoming transparent, and showing the underlying low-res photoreal scenery. It will not appear as a flickering or a bleeding: the *whole* ground tile will be missing, and it will have a perfect square shape so, it's a very different issue than what you were describing.
Some settings that *could* create artifacts similar to your problem, are all the one related to Z-buffer. Sorry not being more specific, but I don't have an nVidia and, those settings names change from driver to driver, and using nHancer, might even add new parameters or new options for existing parameters.
