Heya Doc,
That pixelated sky is def a bug in something you setup. I had it for a little while and unfortunately do not remember how I got rid of it again. (Only thing that comes to mind is your still running kegetys mipmap mod or something, Ill try later to see if I can replicate it)
I do feel you though, it seems ATI cards have much more graphical bugs then Nvidia ones right now. (My main gripe still being the three blue lines on the horizon I can´t seem to get rid of
)