I'm pretty sure we can assume ATI is doing simple mixture of Bilinear Filtering and Trilinear filtering. Around the mipmap transition the Trilinear filte kicks in removing the obivous banding. Now let me quote
Since this is only set at a very mild setting exactly which setting will give the equilivant image quality to Old trilinear. Remeber the current setting actually looks better compared Old trilinear. So how much can we squeeze out of the cards without making it looks worse then 9700/9800.
It's a very mild optimization at the default levels, so of the order of a few percent. But this is a neat algorithm - we encourage you to take the texture slider all the way towards "performance" - we don't think you'll be able to see any image change until the very end, and the performance increases are significant.
Since this is only set at a very mild setting exactly which setting will give the equilivant image quality to Old trilinear. Remeber the current setting actually looks better compared Old trilinear. So how much can we squeeze out of the cards without making it looks worse then 9700/9800.