I know many people who dont have a big enough screen cant handle large screen or full screen and have as well. I beleive that a drag able screen would solve most or all of the problems with screen size. I also know that it can be hard to make it drag able due to pixel compressing and how that may look realy bad, but at least make more options for the resolution to make the screen more compatable with a veriety of devices.
I also need to say that if you are usig a 720p display the edges of the screen get cut and its very annoying.
That's weird, I used to have a 720p display and I never ran into that problem.
Check your video card settings for scaling options. If you use an ATI/AMD Radeon, you should be able to adjust scaling options in the CCC.