FSAA is not fully supported yet (that's why you can have some shadows problems ...), you cant tweak it in the options menu. You can get it worked by changing value in your ArmA2.cfg file.
FSAA=0; Disabled
FSAA=1; Low
FSAA=2; Medium
FSAA=3; High
FSAA will be completely supported in one of the futures patchs
FSAA in v1.02
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Snake Man
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FSAA in v1.02
In version 1.02 there is some issues with FSAA. old_snake (ehem!) BIS Dev posted this on BIS forums:
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