The game crashed for me at my monitor's native resolution of 1560x1600, but 1920x1200 is fine (UI and text is starting to get a little small at that point, though). I actually just put the game at 1280x800, which is fine, but I'd probably bump it up a bit to check out the size and quality if I were going to be playing very much.

What do you mean by they were smaller than your screen size? There were no higher resolution or widescreen backgrounds added for the main menu, and initially areas outside your view are not shown. The fog of war is cleared during cutscenes, though, so try starting a new game, head upstairs and leave the housr (skip through the conversation with Joram). The game should be full screen during the cutscene with Mardaneus and Lanilor.