I had this problem recently, and think I have resolved it. ***Choppers and large vehicles were particularly problematic for me.
Intel 3.4 CPU
NVidia 6800 GT Pro AGP
2 MB DDR RAM
***I did the following...
1) Disable Antialiasing, Anisotropic filtering, etc. Shadows, shading and blood to zero, also.
2) Turn all settings ingame to low. However, I did find that during the game I could turn 'Object detail' up to 'high' to correct the "kaleidescope on LSD" problem. ***However, then my game was unstable and would occasionally crash to desktop.
3) I used the following utilities:
<ul> - Nasty File Remover[/list]<ul> - Installed this modified driver...[/list]<ul> - I modified the 'target' line of my desktop shortcut with this... "...arma.exe -maxmem=1024"[/list]<ul> - Changed my AGP aperture in my BIOS from 64MB to 128MB. ***Read ***this article for details and instructions.[/list]<ul> - Install this amazing utility: Riva Tuner. ***I then played around to find and test my best overclock settings. ***Also setup fan speed as described here.
-- Played around with RivaTuner a bit, and then launched the game. ***I monitored my GPU temp and memory usage, and with a further overclock tweak, have found a state where I (so far) have had no issues with the 'freaky visuals, and no longer crash to desktop. ***I might be able to even gain up some in game settings a bit... I'm still playing around with it. ***Still I have found settings that work for me. ***So now, I will just tweak things one at a time and monitor how it affects performance.
-- I should also note that after installing the optimized driver, I launched the NVidia Control Panel, and in the Manage 3D settings, I found that ArmA was among the pre-installed games. ***My previous driver ('the latest' according to NVidia) did not have the game there and I had to add 'Arma.exe' manually. ***I deleted this old entry, using the pre-loaded one instead. ***Virtually all settings are set to 'Use Global Setting' now.
I hope some of this is helpful. ***I too, was told by others to upgrade my system. ***No thanks, aside from ArmA, my system handles everything beautifully. ***And I have priorities for my money other than upgrading my hardware for one game... even this one!!