well all the application does when it sets AA and AF (providing in the drivers you have AA and AF set to application preference) is tell the drivers to tell the card to do AA and AF
i think its jus the same as setting it in the control panel from the start.
though when i tested on the source stress test, i did find that setting AA and AF in the drivers and not in the game, gave and extra 6fps, and i have no idea why
and no the application cannot override the driver
if u have 4xaa and 8xaf set in the drivers, and then you go in a game and set 2xaa and 4xaf, the card will do 4xaa and 8xaf. the drivers take priority