2. This is what the manual says "Keep the “Mesh Resolution” slider at least at 10 m/pixel, or better, and the “Mesh Complexity” slider at 100. With less resolution, some visual problems might appear." Not quite exactly what you quoted.
There will be different visual problems if you set to *less* that 10m/pixel, and most of the users keep it to less than that, because there aren't many meshes available to exploit that resolution.
And, it IS possible to set it higher up to 5m/pixel, and still not having any problems. 5m/pixel is the last setting that make some sense, because there aren't any meshes around with resolution higher than that, unless they are oversampled, which is not real data, only a waste of memory.
Your problem was that you probably set it even *higher* than 5m, which is really not very useful for any mesh out there (I think the highest res commercial meshes are at 5m), and it shows that spike problem.
The manual tells to set it at least to 10m, because most of the users have problems because they have it too low, the scenery *still* work at 5m, which is the highest resolution for any mesh that has ever been released so, it's assumed very few users should have it higher, because it seems to trigger an FSX bug, which doesn't appear only at KDFW, but can happen everywhere there's a mesh.