JDR13: Anything higher than 1024x768 makes the game window way too small. Is there any way to increase the resolution without shrinking everything? A mod perhaps?
Set the window size as described above, that is what the game will render at. 1280 by 800 isn't too far off the game's original window size if you're looking for a 16:10 ratio (common PC widescreen). 1280 by 720 is pretty close if your screen is a 16:9 widescreen monitor. If you prefer a square window, regardless of your monitor then leave it at 1024 by 768.
To 'blow up' the image to full screen, without rendering more of the game world you'll need to open up your graphics card control panel (assuming you have one). Both Nvidia and ATI's control panels offer upscaling options.
For the Nvidia's latest driver this hides under the '
desktop size and position' section. Choose 'aspect ratio' scaling to blow up to screen, while still respecting height by width settings. This will mean black bars to the sides of your screen if you've stuck with 1024 by 768 or similar 4:3 resolution in Divine Divinity's config. 'Full Screen' will stretch the window up, ignoring height by width ratio.
Divine Divinity's graphics are prerendered 2D sprites, there's no way other than gpu upscaling to render at full screen while maintaining original game window size.