I played for a little over 10hrs with no issues at all. Then I had a quest that took me to Windhelm (I think it was Windhelm), and noticed that some of the stone block textures where extremely blurry and matched the pics that I have been seeing posted. This was while running off the CD (no install) on a Non-Slim 360 (Halo 3 Special Edition, Falcon chipset). After the issue occurred I cleared the HDD cache, but that did not help. I tried opening and closing the menu, entering and exiting buildings, and even taking the carriage to another town and back, but the problem was still there.
Here are the pictures:
http://i.imgur.com/bIrTH.jpg
http://i.imgur.com/2Fm8R.jpg
http://i.imgur.com/Jo3z4.jpg