This thread is obsolete. With the widescreen mod included with the SS2Tool you can set any resolution you like in SS2.
If you get very good performance at 1024x768 and you have at least a 17" monitor try this:
Open cam.cfg in notepad.
Find the line that reads:
game_screen_size 1024 768
and replace it with
game_screen_size 1600 1200
and then you will have Shock2 at 1600 x 1200.
Or 1280x1024 if you please.
If a resolution setting does not work the game will fall back to 640x480.
These settings can also be made with the
SS2Tool.