It seems the menus are always in 320x200 but the game goes up to 800x600.

Anyone knows of a mode allowing for higher resolutions or even a widescreen mode?

This is an old DOS game where the resolution modes are hardcoded into the game itself. So I don't think there is a way to go above 800x600 without hacking the executable (which is quite difficult and time-consuming).

The only other option would be the existing Windows-Version of Ignition, but the game was released during the dreaded Windows 95/98 period which makes it very hard to get to run reliably on modern Windows.

There's a launch tool, I ran it via Galaxy - you can choose scaling options there, up to 1920x1080, as well as the other graphics options. It stretches ingame 800x600 to any resolution you want.

The dosbox config wount effect the menus, as they seem to be locked to a certain res. Also the DosBox config resolution only effects windowed resolutions, not fullscreen modes.

I actually had no difficulties running the Direct3D version using dgVoodoo in Windows 7 (64-bit) -> https://www.gog.com/forum/ignition/3dfx_version/post7 (though I don't own the GoG version so I don't know if the Direct3D version is included)

You can mess around with the settings there to give you a higher resolution, however keep in mind that the main menu is basically low-res pre-recorded ingame footage that is hardcoded to a different (lower) resolution than the ingame resolution, so it'll look quite ugly when forcing higher resolutions (of course once you start a race it should look better).

I think the DOSBox config utility is missing from this release.

There is an ign3dfx.exe which is not the dos version. There is one in the official patch, if not already included in the gog version. It is a windows not DOS program.