The shading rate is a 'quality control' for your renders, I don't know the nuts & bolts of it, but I believe internally it adjusts most of the advanced render settings depending on how high/low you have it set.

It's also seen as a speed control, I use a setting of 20.00 when I'm doing test renders as they can be finished in minutes, rather than the several hours the final render can usually take, but as you've found shader based lighting like UE2 doesn't like high numbers, so even a test render with it can take a while if you don't want it to look all blotchy.