What is the basic premise behind technology such as is found in Oblivion (and other games, I\'m sure; haven\'t played enough to know), wherein objects from afar are vaguely show
You can render to textures for distant objects however you have to re-render the texture every time the perspective changes beyond some threshold. It works great for distant objects where the perspective won't change that often like your example of the mountains in the distance however if the the view source is moving too fast or you are too close then you will get a fish eye effect kind of like the early days of sky rendering in quake. This kind of system lends it's self to worlds like eve online which contain vast distances.
This of course is but another trick in your arsenal and you will still need LOD to some extent.