As much as I appreciate your feedback on this matter Matrix, I don't think this IS the problem, as this can be observed without moving the camera closer / or further from the shadow.

Please take a look at the small demo here: Downloads - Showcase Alpha

You will see, as you move the camera upwards, the shadow pops in and out, depending on the angle.

Note: WASD & Right Mouse Click (Although the click is just for aiming)