Every card/hardware setup seems to have a mind of it's own...

I have found these video settings work best for AH with my ATI card in display property settings:
Under Direct3D: Custom settings checked
Anisotropic Filtering: Application Preference (AP) checked
Smoothvision: AP / performance checked
Texture Pref: Quality slider
Mipmap Detail: Quality slider
Wait for Vsynch: Always Off slider
TRUFORM: AP checked
Under compatibility button at bottom:
32-bit Z-buffer: Disable
Alpha dithering: Ordered
Support DXT texture: Disable
Alternate pixil center: Disable
(important) In 1st splash screen of game, go to video settings and check to limit fps to 60. Things should be smooth as silk.
For me, AH at 1024 x 768 with an ATI card looks awful. I have found the more I push an ATI card, the better the performance. I have set desktop and game to 1280 x 1024 and the game looks great and frame rates are solid 60 fps.
I have an ATI 8500 (128MB) with an AMD 2600+XP.
Good luck!