I've tried turning VSYNC and HDR off and on but no change. I've tried different shadow detail levels and turning FXAA on and off.

I've got an ATI 5850 1gb (11.09 drivers) and 16gigs system RAM, game is set to 1920x1080 with 4xAA and 8xAF, 'high' settings and long draw distances.

Looks about right:
http://steamcommunity.com/profiles/76561198010202183/screenshot/614968094968196524?tab=public

But change view angle a little:
http://steamcommunity.com/profiles/76561198010202183/screenshot/614968094968200179/?tab=public

The cobblestone and loose straw layers seem to flicker on and off depending on view angle.

Any help or ideas?

i have this same issue, i disabled AA and am seeing if that does it on ultra, will post back with my findintgs

edit:

ok yeah i have AA turned all the way off and it fixed it. but i shouldnt need to turn that off to actually run the game. i would loooovvveeeee a fix. it could be something with the video card cause i have a 6950 and its doing the same thing yours is. not sure though...

Disabling AA in the launcher, but forcing it in the Catalyst Control Centre menus seems to remedy this problem - I think. Thought I saw it happen once again, but it is at least a 95% fix in my experience over night.