I have mine set like this now.

I originally had the level of detail radius, mesh complexity lower and the mesh resolution higher. I also had land detail textures un-ticked and I had water effects on Med x2 and special effect on medium (or normal).
I changed these due to recommendations from another website and I am now getting steady 25-40 fps (I have my FSX locked at 40fps) depending on aircraft flown. No idea why this might be apart from possibly running the scenery at their normal settings and not asking the processor to reduce the detail on the fly maybe?
Ps. This was tested running a proper add-on scenery package I have and the default FSX scenery. Not tested on an intensive City scape as I don't have one.
My PC specs
AMD Phenom II X4 865 Black Edition Quad Core
4GB DDR3 RAM
1GB ATi Radeon 5870 (DX11 card)