Looking forward on this! As Arma series players I can tell that you don't need the entire world to play, just a few detailed enviroment in a few Km around for infantry simulation, things change when including air combat. Outerra can handle this, you can focus the details where the infantry will move and let low detailed zone for air - air fight to not have the 'out-of-map' feeling.
Well, it could be Vehicle-based. Lets just say ther will be severall detail levels (around 5 : First Person hi-hi-detail, Open/standard transport hi-detail, MBT´s and transporters of closed type (periscope and camerra driwen) whyte medium detail, Helis medium/low and planes/ships/subs medium/low/werry low) where the different detail types distance apearence would be sensitivelly tuned (no need to hawe too much detail in long distance if all you see trough is an BTR´s periscope) still having an combined option (if you switch the driver look from the hatch, you hawe more looking capability and so a higher detail surroundings to see). It should be modell-based. Just an simple .txt where those parameters for warious places (from transporter driver periscope and hatch view to outter sitting positions for infantry, that just sits on the armoured vehicle). The gamemode-options would give an certain extend to change the detail-levels, features and detail visibility distances via drag-menu base, that would update/change those .txt´s and at the same time give the option to play whyte it manually or making it possible to change them if the game crashes because of them ... Of course, allways before putting an new piece of armor/plane/ship, those parameters would be chosen for it individually (cause all of them hawe an different observeabillity as for they construction) andthere could be an main option - apply global or individual detail characteristics (actually if a type of armour (tanks, transports, planes ...) will hawe a single detail .txt setting (being an global one for the game engine itself), or if any piece of tech. would hawe their own settings acording to theyr own .txt´s comming whyte modells itself - user moddified or in their base setup from modell application into the outerra-sim.)
.... of course i already take the vehicle adding tool planned for outerra in mind, so it would be good to define such implementations into it, when it later comes to life. Also the settings are modifiable and modell-based, because the rangefinders and aiming devices are of an great difference between each other, so it would be an nice way of tweaking all those aspects for anyone individually for each thing he gets inside.
And, as an thought about that ProjectReality post of mine ... the needed soldier-class for various types of technic is an great way to lead an mil-sim and it cloud be ewen brought trought time to an new level, more realistic and engaging game experience. (maybe ewen very slightly different characteristics of movements between character clases - specnaz/mechanic-driver/pilot/...)