Tiling might also be an issue with the texture atlas thing, as it basicaly means that a large polygon may not fit into the 0-1,0-1 UV space. In this case the single texture would repeat itself over the surface, but you'd have to cut the polygon up to work with a texture atlas layout, because it probably can't handle the texture coordinate conversions for out of range data.
Now manually cutting stuff up to smaller quad polygons is an option, but it may be a problem with large objects like city buildings in GTA type games. You don't want to spend thousands of polygons on a single skyscraper. But you don't neccessarily have to build another GTA with tech 5, and those sandbox games have other special requirements as well anyway.