We don't check the scenery level of detail at all. The LOD used for the objects is based on the distance in pixels for an object, and is doesn't depend from the scenery range slider.
The scenery range slider controls only the radius of the VTP ground terrain outside the airports, it shouldn't affect 3d objects at all, even less considering we don't even draw buildings from BGL, but directly in C++, so that slider shouldn't have any effect.
I usually keep my scenery radius at Medium, and haven't notice the effect that you describe.