After a couple hours of tweaking ini files to hell and back, I think the problems are solved.
I was right - specularity, Vsync, and a couple other settings are hard-enabled in the .ini files, and cannot be turned off via the game menus.
If the options don't work, why fucking put them there, I wonder... but that's a bitch-fest for another day.
Deleted my backups of the ini files by mistake, so had to start again from scratch; and couldn't remember what all I had changed. I must have disabled the stuff before, and forgotten about it.
Got it running 1024x768, Actorfade set to 10, Object and Item fades set to 8 each, HDR enabled, reflections and refractions enabled.
Getting a solid 15fps outdoors. Not stellar, no, but you also have to bear in mind that I just deleted ten plus gigabytes of data from my hard drive, and have switched video driver sets four or five times.
My windows drive is in severe need of a defrag at this point. I'm surprised the game runs as well as it does. Going to tweak a couple more global settings in my Nvidia control panel from hell, and then let the 'Mute here sit idle for several hours while windows attempts to unfuck my C:\ drive.
One of these days I really need to spring for a new Vista/Win7 compatible version of O&O Defrag...