I have an overclocked C2D E6700 or 6750 (I forget which, and I think it's overclocked to 3ghz) with 2gb ram and geforce 8800 GTS, I can run fullscreen 1280x1024 with maximum spell effects and shadows, turning down mostly superfluous things like ground clutter. My sight distance isn't as high as I'd like it to be (one notch above the lowest setting), but I can still see decently far. Only lag I get is latency based, fps never grinds even in wintergrasp battles or 25man raids.
Getting every setting to the highest detail possible is definitely not necessary to have a smooth and good-looking experience.
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