For those of you who are confident that you can do this yourself, the solution is here.
For those of you who are not confident with editing game files yourselves, I have created the fix and am going to share it here with you.So here it is:
Same but bigger in case that is not clear enough :)
It fixes most shadow issues, though some weirdness will remain. This is normal. Not every shadow in the game will be nice and smooth but any pixellation you see will be much much less.
7.0.55.010001 Download@Mediafire // Download@Box
Go to this location and replace the GraphicsRules.sgr file with the one you downloaded:
%programfiles%\Electronic Arts\<<Sims 3 folder or latest EP/SP folder if installed>>\Game\Bin\GraphicsRules.sgr
%programfiles(x86)%\Electronic Arts\<<Sims 3 folder or latest EP/SP folder if installed>>\Game\Bin\GraphicsRules.sgr
THIS IS A FIX FOR ATI GRAPHICS CARDS AND P
This file has been tested and is base game compatible. It should work with all game configurations. Please let me know if you experience any issues and I will do my best to help you.
As always, make sure you make a backup of your original file and of your save games before installing this. You will need to restore the original file when you install a new EP or SP SO MAKE SURE YOU HAVE A BACKUP!
I have also tested this with 3booter and FPSlimiter and it works. The people on the Sims 3 BBS experiencing problems with the fix were missing part of the coding. My version of the fix has no such issues and runs perfectly fine with both 3booter and FPSlimiter installed.