Tharos I was actually discussing this over at a few other forums. Let me give some thoughts.
For a generally good method of LOD, it would be preferable to use a combination of 3 things for calculating the LOD: Distance, Speed, and Altitude. A faster moving object will have less rendering, the same with higher and further, on the other hand, a similar approach as the grass layer from ArmA 2 may help for cover and concealment.
Furthermore, as for data, remember that you can reuse game assets, even on a ground level, so the main issue would be rendering it and placing it, not hard drive space.