IHMO, if there are going to be weather effects that reduce visibility, it needs to be both drastic, and look really good. In other words I want the fog to cut visibility down to under 200 meters.
1 Kilometer is too far if you want fog (or dust, snow, sandstorm, etc) to be a feature, simply because that is the max range of most weapons. If fog is going to be that far out, may as well not have it.
The other aspect is looking good. The Crysis engine does volumetic effects quite well, and since you wont be drawing much terrain (since everything is foggy) then may as well blow those extra GPU cycles on fog! pockets where it is more dense than others, mechs leave a trail in the fog, etc.