Well... Uninstall the mod entirely, and rerun TES4LODGen. You have just created a bunch of LOD files with RAEVWD enhanced data. The game should look nice though. Maybe you should take some screen shots to capture the moments.
Hmmm... You can also look at the bottom of the first post of my site's thread for ways to optimize and stabilize the game. If you go as far as PyFFI-optimizing the vanilla meshes, you should see a significant increase in FPS. If you are already using all of those things, your system is not powerful enough to run that mod (well.)
Edit: I missed the HD 5850 thing, but, welcome to the joys of using visual enhancement mods. As much as I respect Arthmoor (and use a number of his mods) I have not added that beast to my setup.
Edit: Don't get me wrong. He went to great lengths to optimize that mod. You will not find better. If you like it enough, keep it. Try the suggestions I have on my site. You should definitely see an improvement, I just do not know if that will be enough for you. Getting ~20-30FPS constant with heavily-modified (especially with REAVWD) Oblivion is very good.