With the exception of the external camera, I've always used otherwise fully 'realistic' settings since the game came out. I love the challenge of learning and trying to master a complex game, so that's pretty much how I always start out, with flight sims etc.
I've never played with all the help features turned on, and don't think I've ever made a shot with automatic targeting. So it follows that a lot of screenshots I see on the forum are quite alien to me, with sunken ship icons and hydrophone contact lines on the map. I also rarely bother placing a man in the WO slot, because I have no real use for him - only to tell me when the torpedo tubes have been reloaded
I don't use the external camera to cheat at all, but I just enjoy the graphics too much to switch it off.
At the moment I also have the stabilise periscope option on, since it's almost impossible to use the U-jagd tools in OLC's GUI without it (and believe me, I really tried :rotfl
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Everybody has their own preferences so I'm certainly not saying it's bad for people to use lower difficuly levels. I expect most people prefer to get going more quickly and ramp up the difficulty later. But for some reason I adore trying to tackle steep learning curves in the first place.