As an addendum to the above, you can also set Effects=2 for a little bit better cannon hit effect, flak bursts, stuff like that. I think it makes a serious difference. Will show a shot or two of what I mean.
First mission flown after getting my conf file squared away, I had never seen IL2 look like this on MY screen!

In pit view, notice the white 20mm shell explosions. They are much more transparent and smoke like with Effects=2. Hard to see in a still screen.

Same view, but from the victims POV......lol

Just a shot to show what IL2 can still do. Immersion is key right? Well, these shots show what immersion means to me.

This was an epic dogfight! You might notice, we're in a rolling scissors about 70 meters or so in the air. Thank god all those Fulmars have for armament is .303s, otherwise my goose would have been cooked!!!
Just for comparisons sake for anyone looking at the thread, my setup is as follows:
AMD Athlon 7550 Dual-Core @2.5Ghz
3GB DDR2 RAM
nVidia 8400GS w/512MB DDR2 RAM DX10 capable
320GB SATA Hard Drive
Logitech Extreme 3D Pro joystick
X52 FCS throttle unit (connection to stick crapped out, found I liked mixing the two better then either one by themselves!)
As you can see, this is a power house gaming rig!

LoL Seriously, the weakest part is my graphics card as it's not built so much for gaming as it is for video decoding and editing, but it will work for any 3D task, just not as well as say an 8800GT. Even taking this into consideration, I am able to run IL2 maxed out in 1366x768 with only a slight slowdown from time to time.
One other thing, I use Water=3 to keep the frames up flying over water, which I do a LOT. Water=4 looks great and runs well enough, but the improvement over 3 doesn't justify the performance hit, and 3 looks just fine to my eyes used to integrated graphics cards (never again!)