[SaQSoN]

Originally Posted by JVM

If tessellation can be "activated " function of viewing distance

This is exactly, how it works in the DX11, fully automatically. Basically, this feature replaces normal mapping feature. the later one is kind of "fake" 3D, which uses lighting effects to simulate small details. On the screenshot with the steam engine you can see "3D" rivetts, done with normal mapping. However, they only look 3D, while actually being flat.

Now, should the game support DX11 tesselation, at a certain distance (usually very close), the rivetts would become real 3D, in the following way: the polygon, this rivetts are painted on, would be tesselated into a HUGE number of a smaller polygons, which will be then displaced, using the same normal map as a displace map and form real 3D objects.

Originally Posted by JVM

it would add a lot of "lifelikeness" to objects like rail ballast and sleepers, road sides, craters, generally man-made objects like houses, buildings...maybe without taxing too much FPS!..

Actually, that is what normal mapping does quite well too. And definitely with bigger FPS (since there is much less polygons used).
As I said above, you would see distictive difference between displacement map and normal map only very close to the object. In a flight sim player very rarely sees objects that close (except cockpit, offcourse).

Originally Posted by major_setback

The picture: They are the same, but of course the model must be mapped in the correct way for the 3D effect to show...that is the wonder of this new graphics technology. It causes a lot less demand on your system than actual polygon modelling.

If a model is correctly made and mapped for use of normal mapping, it will not have to be remodelled to support tesselation+displacement mapping of DX11.
So, generally speaking, if someday Oleg's programmers will decide to include support of this technology into the game, his models will work well with it without any change.