Hi Rich,
I would be doing 9.6m for FS2004, except FS2004 doesn't display 9.6m terrain, it turns out. What you are seeing in the Grand Canyon is actually 19m terrain. FS2004 doesn't have the capability of displaying LOD12, 9.6m terrain. A few months after F2004 was released someone did an analysis and determined that 19m terrain was the highest resolution FS2004 could display. This was subsequently confirmed by MS.
9.6m for FS2004 would create files 4 times larger than 19m terrain, without any improvement in the display.
jt/fsg