It's pretty much normal behaviour. On the highest settings with a large explosion occurring very close to you, you get large FPS slowdowns. Easiest way to see this happening is with a tank and firing into the ground right in front of you as you are driving forward.
I've seen this on two different setups and it only went away on my current one. From OPs comment about it happening with a rocket pod blasting into his tank, it sounds like this. Perhaps you can maintain a good frame rate through large up close explosions with lower settings, but I have always played with everything turned up and it was always the case on my past two video card setups that you got slow downs in large explosions.