Try both the 2x2(4x) options in 640x480 or 800x600 and see which looks better. I know LOD means level of detail, but I forget if that makes it better or worse.
Look here about LOD bias
http://boards.psxemu.com/showthread.php?s=&threadid=2634&highlight=bias
Look here about LOD bias
http://boards.psxemu.com/showthread.php?s=&threadid=2634&highlight=bias