Set anisotropic filtering (AF) to 16x, a antialiasing (AA) to 4x, turn on FXAA and transparency AA, turn off gamma correction, vsync (set to app controled) and triple buffering. SH4 has its own vsync setting, so turn it on instead, you can also turn on fps limiter in inspector. AA and AF (with your GPU) should be the last things to turn down, as a last resort if the stuttering wont go away. Oh, and set negative lod bias to 'clamp' for better quality.
The sun on your screenshot is a result of 8xAA. Set it to 4x and turn off gamma correction. But, of course, its your choice, if it (flat sun) doesnt bother you too much, go for 16xAA.
And remember about compatibility bits for AA, the ones from Rubinis post at first page are still the best for SH4:
20000000: EA Strategy Games.
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