SSMChan: My system is also older and maybe a bit worse than the OP (Athlon 64 x2 @ 3 GHz, 2 GB RAM, 8800GTS, WinXP). I knew I was going to have to run at lower settings but the high bar for graphics settings had also caught me by surprise. But I tend to choose performance over eye candy and so wasn't too bothered about tweaking everything down until its at a framerate I am happy with.
Texture Downscaling seemed to have made a big difference for me. I've set it to "Low" at the moment and I think it still looks pretty nice. It was actually quite tolerable at "High" as well and in general you'll only really notice during the close-ups (conversations, etc). You might want to try this, since you are running at a low-ish resolution anyway. If you check the config files and have a look at the texture sizes the game is working with, they are pretty scary big by default.
Depth of Field, SSAO, Motion Blur, and UberSamply are big performance killers.
There is weird freaky stuff to do with VSynch that makes the mouse go all laggy for me and makes everything feel slow. I turned it off and while the frame rate might not be better per-se, it certainly feels a lot better.
The Bloom isn't as horrific as I had feared, and so I'd left it on.
I am running @ 1600 x 900, Low Texture Downscaling, Small Texture Memory Size, Bloom and Vignette enabled, and everything else turned all the way down/off. And I am pretty happy with performance and feel it still looks pretty darn shiny. I might put Texture Downscaling to Higher at some point once I get a better feel for things, since I feel it still looks OK.
Note: The readme file has a much better description of the graphics options than the manual (which was pretty much useless for this).
Now if only I can tweak what the heck it is doing with my sound/speakers. I'll rather force the game into stereo than to have to mess around with my global speaker settings each time.
Good luck.
Thanks for the tip. The game is running a little better without drop too much from 20 FPS at 1600x900 resolution.