You always want to run in Open GL as its IL2's native API. As far as video settings, I can't imagine why you wouldn't be able to max them out. I run full bore with a 256MB 7800gtx, and even the 320MB card you have should be about twice the card.
Sally forth unafraid M8.
As an aside, you might want to try 1024x768 to make the dots more visible at a distance.