The choppiness was not due to graphics (at least for me), as evidenced by the fact that once I paused the game, all choppiness was gone until I unpaused. Since the primary purpose of this patch was to eliminte 'running out of memory' crashes, it likely was that - some sort of memory leak slowing eating up RAM leaving less and less for more 'liquid' assets to swap in and out of RAM, creating slowdowns and bottlenecks, until it ran out of minimum space completely and crashed.
To answer your question, yes, it's scaled. Models are LOD scaled (meaning it reverts to lower detailed models as you zoom out) until you get far enough to remove models altogether and replace them with the icons. Textures on models and planets use what's called 'mipmapping', in which a texture is saved in a variety of sizes - as you revert to lower details, it uses the smaller sized textures, which take up less memory.
On that note I'll say that the mipmapping and LOD scaling of the game is very well done - there's no abruptly noticable changes in detail.