What a problem
TR2 limitations always making things so frustrating ! I have an opinion, if I might suggest, it's kind of drastic and may not be the best but you could try it: remove the horizon. The entire sky would be black but uniform. In Opera House there is no horizon, and I think none of us had a problem with that. Of course it is very different when it comes to a totally outdoor level, but at least you'll not see giant squares blinking on the distance. Don't give up Danath! You'll find a way
EDIT: also you could texture the sky manually so it doesn't look so empty, like in Return To Egypt and Temple Of The Cat