What i have found re; realism settings is that you need to set them after you have accepted a mission, but before you actually take the "lets start the mission" dialogue line.
So start your campaign and regardless of your main menu option settings, go into the briefing screen, request your mission, come out of the dialogue and then go into options and set your realism. Then Save your game, and then go back into dialgue and get the mission started.
You should not need to change anything for the rest of the campaign after that.
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