Holy Crap! THANK YOU for posting your FIX!. i have had this exact same problem for the last couple of weeks! First time ever!. i was running Phoenix 1.6.0 which i LOVE btw.. For me certain textures would be blurry mostly these were pictures, SL photos.. but also some other textures as well. i too, tried EVERYTHING else.. No one but You came up with the solution!. I couldn't understand why all of a sudden this happened, nothin had changed on my end at all, infact my router was replaced and my internet had recently been upgraded to an extremely high speed, so i knew it wasn't me. I never changed this setting before so was not aware of what it did, tho i am usually diligent in learning what all the settings etc Mean, but get nervous messing with hardware changes lol. i did try Firestorms newest release and that DID solve the problem, but i HATE how the chat box and IM don't pull together like Phoenix and those dumb icons on the screen.. It's a Ton of work trying to clear that crap all the time to see what's goin on,, i feel like all i do is CLICK instead of being able to enjoy the game. I did however decided to try the Phoenix 1.6.1, thinking that maybe this was a bug in 1.6.0, but it was still there in that but decided i'd try and live with it as long as i could, and for sure now that You found the solution, i'll be sticking with it until the end.... and then hoping Firestorm fixes that damn chat box. LOL.
One last note on this problem, i seached EVERYWHERE trying to find an answer to this exact problem.. i did find something about this same issue dating back to 2006 but Nothing else up until Yours. It would be nice if maybe this problem could be posted in the knowledge base for others searching.
Once again, that you!
Much Appreciated,
Sensual