Changing Graphics in game = wrong textures?

Hi everyone, Not sure how to put this but I noticed when changing the detail level in game (up or down or even up then down to original value) this happens:

to

Everything that has a texture goes weird like wrong textures are loaded on the GUI and models. If i restart the client (with the new graphics number set in a config file and loaded) the new graphics level works fine. What am I doing wrong? This does not happen in Unity nor any errors in the output logs so I am really stumped to the cause/fix.

Ben

Anyone have any idea as I was suppose to have a public test on the 22nd but I still can not figure this out.