I am using war tapes as well. My 7.1 system consists of a Denon AVR-888, a BIC Acoustech 500W 12" sub and two Acoustech multi-directional rear surrounds, with the rest of the speakers being Radiient Calypso towers, center, and sides.
If your system can handle it, war tapes is the way to go. Sounds absolutely sicckkk!
Anyone who owns a 5.1 or 7.1 surround sound setup should use the "war tapes" audio setting. It makes you feel like you're in the middle of the battle. Bad Company 2 has got to be the best sounding military FPS ever.
I have a 5.1 Surround Sound system and tried War Tapes but noticed when alot of explosions start going off it gets too garbled also the guns don't seem to have that punch sound with War Tapes, just echoey. Also when tanks shoot and I'm standing right next to them it sounds like my sub woofer is about to explode.
At the moment I'm using the TV sound setting, ...somehow it sounds EFFING awesome! Its like a mix of War Tapes and Home Cinema...the best of both worlds. Try it....