All of those times that someone has reported jagged edges at the terminator of an low-poly object, like this one, I always thought we didn't have a solution without modifying the code. For example:
http://www.planetside.co.uk/forums/index.php/topic,3744.msg39205.html#msg39205I was looking at your 3.4 render and wondering why it
didn't show this problem. The answer is the way that TG3 handles bump mapping. By displacing the shading points outwards according to the displacement/bump map, it pushes the surface into the light in places that it would otherwise suffer from the sharp jagged terminator problem.
This means that in TG3 you should be able to use a small amount of displacement offset in the Default Shader (or something similar using other displacement shaders) to avoid the terminator problem, even if you don't use a displacement/bump map.
I changed that for TG4 without realising that it would break a useful feature. I'll probably change it back, now that I know this.
Matt