I am having the exact same problem that the guy in this video is having.

http://www.youtube.com/watch?v=aSaATAHGMRk

Everytime I am outside and look up, the sky, mountains and general background constantly start flickering and it's making the game really hard to play without squinting or looking down when on the move.

Is there even a fix coming out for this? I haven't heard any word from the developers but a lot of people are apparently having this same issue.

I'm using an Nvidia GeForce GTX 560 with everything just about maxed out, everything plays fine apart from this awful flickering...

I had the same problem, doing this fixed it.

http://www.gamesas.com/index.php?/topic/1257566-potential-shadow-fix/

I tried that, the flashes are still there, plus it made my game looks worse than before.

Does anyone know how I can get the ini back to how it was before?

It might be an FPS issue.

Download Dxtory (Shareware, 10 second startup delay for free version) or BAndicam(not tried) and limit your FPS to either 59 or 100 under the Advanced tab. It also helps with mouse X/Y speeds in indoor areas.

I made a post about it here: http://www.gamesas.com/index.php?/topic/1259313-a-possible-fix-for-both-the-flashing-and-maybe-the-xy-axis-speed-issue/

nvm.

Shame it didn't work for you. Anyway, verify the game cache, I did that and the ini got reset to default so I had to edit it again after that.