actually, i've never heard of that problem. in my own personal testing on my machine, i've never encountered that problem. i do know that the Lag Fix gives me a 6-7 fps boost on both games which is why i use it.
as far as my own personal diagnosis, well, it sounds like the game wasn't re-applying the graphics settings everytime you loaded a new module. so whenever you went and changed something, you forced the game to re-apply all the graphics settings, and thus return your framerate to normal. either way, its a great all around fix for the graphics, and apparently fixed an odd problem on your system.
and in case your wondering, my specs are:
Radeon 9700 Pro (oc @ 365 core & 340 mem)
1 GB DDR333 RAM
Audigy2 sound card
See the struggle of the faithless lot as they negate their time
How low to sink to the depths of their frame of mind