Yeah just use a vertex shader and for each vertex have an attribute which is its target position. Then your shader measures the distance, calculates a scaling factor (smoothstep or equivalent) scale and draw. Pass the vertex shader 2 uniform values for minimum and maximum scaling distance to make it easily tweakable.
I was playing bf2 last night and scaling is definitly what it uses for grass, but I think it handles shrubs differently, with imposters and fading.
Anyone know how FarCry handles vegetation (seeing as its the daddy of veggie environments)?