Please leave the option available in the settings.
With the last update of WSE2, my FPS drop from 120 to 60 fps with horrible lag.
And when I disabled this bullshit in the config file, I am magically back to 120 FPS..
I know you are trying to improve CRPG with all this and I am grateful to you, but please, do not force ever this horrible option.
-go to: My Document\Mount&Blade Warband
-open the "crpg_beta_config.ini"
-find the line "bOnDemandTextures" and set it to false.