It is my understanding they do. This is the case especially for terrain related things such as in Frostbite. Perhaps ID megatexturing, in the case somebody still cares about them. Even games which are not streaming can still be more conservative before trashing old data.

There's of course the option of higher res assets.

My suggestion is to not mind those issues. It's a boatload of work and in the end, not required for market.

I've never personally shipped a PC game, so I don't really have first-hand experience with this. For our current title we have a streaming system where the majority of our textures get streamed in based on proximity and visibility, and then get placed into a pool of fixed-size memory. With our setup it's easy to know if we can fit a texture in the pool before streaming it in, so we can drop the higher-res mips if they won't fit. However this isn't really something you want to do in a shipping game, since it means you might unpredictably get quality loss on key textures depending on how they play through the game and what hardware they have. We really just do it so that we don't crash during development, so that we can fix the content for cases where we're over-budget. Obviously this is a lot easier to do when you're targeting a console with a fixed memory spec.

Based on what I've seen from playing games and reading reviews, I would suspect that most games don't bother trying to adaptively scale back textures and instead just rely on the user adjusting settings. In D3D you can over-commit memory, in which case the OS just starts paging your GPU memory in and out. So your performance starts to drop off a cliff, but you don't crash. Hence you get benchmarks where at certain settings a 2GB video card will get significant better performance than 1GB video card with the same GPU core.