Indeed MQ refers to Medium Quality, though the more I played around with imposters I decided there wasn't that much point in this middle ground as it causes 2 sets of transitions instead of 1, more assets to load etc. It was more of a headache than it needed to be.
In a bright scene my preference is to go with LOD0/1 (LQ/HQ) then apply alpha dithering to both meshes in opposing directions at your specified LOD distance (so it's not a on/off transtion but more of a 'phasing' effect). This does cause odd behaviour on the screen edges for distant objects though where I think the FoV of the camera comes into play (due to the raycast going to the cameras origin regardless of angle).
Anyway I have since found a new plugin that does it in engine and does a better job (actually produces omnidirectional imposters :D) :
https://github.com/wojtekpil/Godot-Octahedral-Impostors
Again this is also not my plugin and comes with its own quirks, but so far in my testing, it's been great.
