I took a further look into the issue, and this is something that is going to be expected since volumetric fog is inherently expensive. When you lower the quality it uses fewer z-slices to reduce the quality of the fog which is what causes the pixelation that you are seeing.
You can try adjusting r.VolumetricFog.GridSizeZ to improve its quality, but keep in mind larger numbers will be more expensive. Additionally you can also lower the lights intensity a bit to make the artifacts less noticeable, then adjust the fog settings to achieve the look you want.
Let me know if you have any other questions.
Thanks,