32 MB wasn't enough as the game would experience severe texture thrashing at times (such as the train level) if you didn't have a 64 MB card. Also only a few textures in any given scene were the larger versions while the rest of them were the standard 256x256 models.
I see, that sort of explains it. I actually used them on a 64MB GF3, but I do recall thinking how bad the normal textures looked when a high res texture was visible in the same scene. 😛
As for the sharpness at close range, it's because the game supported detail texturing. Detail texturing is basically an extra large mip-map that is only used at very close distances (i.e. point blank range) which is why things get sharper at that distance, not blurrier like in most other games. Very few titles actually support detail texturing and tend to be older ones like Unreal, UT, Serious Sam, NOLF, Chaser, etc. Most modern games don't even support this feature.
I also noticed that detail texturing thing in all the Unreal engine games I have. Why did game developers drop that? It was a great feature IMO that made an enormous difference in image quality. I think a handful of newer games like UT2004 and Far Cry have this feature, but the effect doesn't look anywhere near as good as it did in the Unreal engine.