That image you took Steve is identical to how my A4000/A1200's run in higher resolution modes on my 1438 monitor too, and it is due to the screenmode and the pixels being square. It never really bothered me when I used the Amiga all the time as the resolution was flicker free and much higher than any other modes, allowing for more screen real-estate.

I do however remember getting a VGA display driver from a coverdisk that allowed you to adjust much more and allow for the whole screen to be used. I forget which magazine it was one, but at a guess I would say one of the AUi disks. It should be on Aminet too.