After finally waiting long enough, I bought the game again to see that it was playing very well compared to launch. Unfortunately, after entering the first new area, Ghost Hideout, this happened:

http://i40.tinypic.com/4jmkr8.jpg

I went through anyway and came back out with normal textures again. All was fine until I entered another new area, Wasted Garage, only for the same to happen again. But upon going back out to the main area, the textures had broken unlike before.

My system specs:

Windows Vista Home Premium (32-bit)
Intel Core 2 Duo @ 2.2 Ghz
Radeon HD 5570 1GB (w/ 12.1a preview drivers)
4GB RAM
Running the game through Steam

Anyone able to provide a fix/help or will I just have to wait out for an update to the game and or drivers?

Afaik the megatexture corruption is caused by insufficient vram. Seeing as you're running 32-bit (max 4 GB total ram (system + video)) it's likely that memory is the issue.
Windows 32-bit by default allocates 2GB for windows and 2GB for everything else. Those 2GB you have for the game, includes both system ram and video ram - so ~1 GB system ram and ~1 GB of the vram on your graphics card.

Try disabling anti-aliasing and setting the texture cache size to 'Small' (4K Virtual Texture resolution).
For further memory reduction, try disabling the Windows Aero interface.

PS. How is the game performing for you? 60 fps average?

Yeah, setting texture cache to small seems to fix it, which is a shame, because the texture pop in really bugs me :/

I average around 30 fps, sometimes it can go as high as 40-45 in smaller, less populated areas.

It's possible your performance is low because you are playing with a dual core cpu, as rage is much rather CPU limited than GPU.

Try locating the steam window -> find 'Rage' in your steam games list -> right click and select 'properties' -> in the new window press 'set launch options' -> in the field that now pops up, type (without quotes) -> "+set com_allowConsole 1 +set jobs_numthreads 1" -> press ok and close the properties window. You should also try with -> "+set com_allowConsole 1 +set jobs_numthreads 0".

You can also edit those variables within the game if you open the console (typically the key below ESC and above Tab, is mapped to '?' on scandinavian keyboards) and type in the command like "set jobs_numthreads 1".

I'll give that a try later. Thanks!