2010 version

Yes, the ground raises to prevent this effect from becoming even worse that what you see here, so you see its a juggling act between the effect on the ground when you zoom out (ground raises 6inch) and the effect in the air when you look down(breakup because the ground is not high enough!). To totally stop the effect looking down would require making the ground raise up even more to stop it, that amount of raise would be unacceptable on the ground.

FSX is full of these compromises that many just dont realize. It all comes to the fact that Microsoft whats everyone to use the default AFD/AFCAD looking ground system(does not suffer from this), they removed the old ground 'layer' system from proper FSX code to force designers in to the AFD(default airport) route, but no one likes that bland AFD look, so I have to cheat and manipulate it as best I can.

Thankfully if your flying normally, you dont fly vertically down into an airport, and to prevent the 'ground raise' effect simply add "WideViewAspect=True" to the FSX.CFG file, that will prevent it in most situations even at 0.3 Zoom out and tripple monitor setups.

You can solve both of these by using the old stile code , some old code still works in FSX but theres a big FPS impact when using old code in FSX, there are memory holes related to using old code and this break up in F12 mode is worth putting up with to keep the FPS up. FPS on FSX is constant problem for most users, and I do all I can not to make it slower than it has to be.