Feel free to contribute things you've learned. In fact it'd be be even better if you did experimentation yourself to help figure things out for everyone else. I will probably edit-in any contributions into this original post.
UPDATE: I did experimenting on my own and noticed that my computer will CRASH if I run SC2 with invalid variable.txt settings. It also may be the culprit (although I find it hard to believe) of my computer now being unable to boot with two video cards, even though they both work individually.
Everyone probably knows about this, but if your video card is fast, you should definitely enable this, since SC2 has no FPS limit by default, and will overheat video cards.
These values only REALLY matter if you don't have Vertical Synchronization (VSync) enabled, since Vsync will cap your FPS anyway.
Values can be changed to taste - a bit higher or lower than you desire, such as 60 for the GUI, and 80 for the game
Add the lines:
frameratecap=60 (In-game FPS limit)
frameratecapGlue=30 (FPS limit for the battle.net user interface)
Run Starcraft 2 at a custom resolution
This one is pretty simple, but some of you may not have realized it.
Add (or edit?) the following lines:
Width=X (X being the screen width you want in pixels)
Height= Y (Y being the screen height you want in pixels)
Disable all creep effects:
Creep becomes a texture. No more animations. Some competitive gamers may like this.
Ultra-high (extreme) graphics settings.
Extreme settings not available through GUI. Note, this runs EXTREMELY SLOW from what I heard, even on newer cards. The visual difference is almost ZERO in many cases, too.The major difference this does I think it make the shadows super-detailed. There's some other differences, but you don't notice them as much. I do not recommend this change to put in your variables.txt due to the performance cost compared to graphics boost.
Add the following lines:
GraphicsOptionOverallQualityVer7  = 4
Performance AND good quality - tweak
SOURCEThis will maintain most of your current ultra settings,
but lower a few settings for a major performance boost. Note, this is designed to improve performance from ultra (highest) settings, in case you either want it to look different, or perform more smoothly.
hdr = 0 (Seems to lower color de-saturation of units, but also removes most of the glowing on most units. Also reduces but not completely eliminates the glossy/shiny look on models)
shadowmapsize=512 (shadow detail. You can also try 256 or 128.
transparentshadows=0 (Major change for ATI Radeon cards I hear. cloaked units get normal shadows instead of transparent.)
Completely removes shadows as far as I know. This is another competitive gamer performance change, but I think can just be done in the GUI?
shadows = 0
Untested, but obviously water effects:
This could be another useful improvement on some maps for competitive gamers. I have not tested these, and do not yet know what they do for certain, but here are what my values happen to be.
waterreflection=1 (water reflections effect)
waterrendertargetsize=1024 (water quality I'm guessing)
watershadow=1 (shadows in the water? possibly shadows FOR the water waves?)
This makes the screen/gameplay-area SLIGHTLY "darker", since there is a small amount of fog on normal level ground, but the main thing you'll notice is all low ground (pits,canyons,etc.) that is normally unpathable (unless you specially edit it in the editor) will be visible, as the fog that normally covers it will disappear. Not sure if this increases or decreases performance, but it looks pretty cool IMO.
Remove the glossy/shiny/slimy look on all models
If one sets hdr to 0 it will diminish the shiny/slimy/glossy appearance on all models, but models will also loose all glow effects. However, if one keeps hdr at 1, but sets spec to 0 you will loose the glossy look completey, but keep the HDR glow effects. Note that spec=0 considerably reduces the perceived detail level of many units (especially zerg).
spec = 0
Remove bumpy textures
This will remove normal map (bump map) effects on all models, including the terrain. It makes the terrain flat looking, but also removes the 3d look on all other textures that use it (pretty much every zerg unit, and not much else AFAIK). This affects the quality of zerg units' detail a lot, but makes the terrain a bit more clean looking.
modify the line:
Test these if you want. I have not tried them, so be careful.
I am personally requesting if anyone knows how to remove all lighting in the game. This is an option in the editor (view>lighting), but I don't know it's variables.txt variable, if it even exists. Note it is NOT "lighting" or at least "lighting = 0" because I tried that and it crashed my computer.
Unrelated to variables.txt, but very useful if you want a visual boost:
This information is only relevant if you have an ATI Radeon card.
ATI has released updated drivers to enable Anti-Aliasing in Starcraft 2. Previously even forcing application to use AA would not work for Starcraft 2, but with the new driver, it can now be done. This will slow down your FPS considerably, so watch out.
It also improves performance in certain crossfire setups.
Here is the link to AMD's (ATI'S) download page or the new driver.
nVidia cards could/can already force AA.