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http://cloud-3.steampowered.com/ugc/3300324428657299022/A08D959458D197B28D5B140F364A6AF37EF394B0/
http://cloud-2.steampowered.com/ugc/3300324428657293007/EE114773146CA0916DC6B44D2DEF6CD8A84EDB27/
http://cloud-2.steampowered.com/ugc/3300324428657285416/616EF387D415859F7A3C524E5654C91E2A168F83/
Try deleting the bmengine.ini file.
This will reset the game to defaults, so you'll have to reconfigure everything, but this may fix the problem with the texture LOD.
http://steamcommunity.com/app/209000/discussions/0/613936673599583172/
If that link won't work, the key seems to be the DetailMode= part of the BmEngine.INI file. DetailMode=2 being the highest.