The only thing the blurriness affects is the police helper, callout dialog, and police computer. My graphics are perfectly fine (if you don't include the aforementioned problems). I press "P" usually when it goes blurry after I press "Alt P" so I don't think it has anything to do with that.
"P" only affects my actual game graphics. My graphics are perfectly fine. The blurriness only affects LCPDFR in the dialog box for callouts, police computer, and police helper (if I have it installed). GTA IV on its own is fine.