Thomas sent me a note claiming that he has discovered an ATI D3D driver bug. This bug is associated with the D3DRS_FOGENABLE option in DirectX 8.1 and affects the FSAA quality mode. The vertical edge filter is turned off (2xFSAA; in 4xFSAA the filter is on, but weaker than without fog), if fog is enabled. You may want to check out two comparison screenshots @ ToMMTi-Systems.