Under this file look for the following variables, e.g. ShadowDistance=, ShadowMapSize=, DistanceLOD= etc. There may be other variables here, so try Tweaking them. But I'm not sure, if you can find the Exact Variable, which you are looking to Manually change. Nonetheless, Give it a Try.
AC2 was lead developed for the consoles and shadows are demanding graphically hence why the draw distance for them is so poor (literally less than five foot and, yes, it does look ugly). It's also why the level of detail is so aggressive compared with other developed for PC games.
Unfortunately it is unlikely that you'll be able to tweak them to look better as the PC version is effectively a port with options to run the game at higher resolutions and with better AA plus added support for keyboard and mouse controls.
OK. It looks like the 'Assassin2.ini' file, does not contain these variables. That's bad, and it seems the DEVs have changed things a lot here in AC2. I thought it might be somewhat similar to Assassin's Creed.
Year after year, PC games are getting hard to Tweak/Mod. Thanks to the Consolisation, of the PC ! *Sigh*