Misfit and OP, 1280x1024 is still gonna get you some aliasing on near horizontal rendered objects.
SH3 gives me those even tho my AA is at 16Q and 16 aniso @ 60 FPS; on SH4 they are less noticeable due to running at 1920x1200.
You are running at near SH3 res (1024x768) and as such the aliasing is magnified, try running at a higher resolution with a lower AA as that may improve the overall appearance more than a lower res with higher AA.
