Hi.
I've been able to configure the game to play fluently on 1280x1024, 65000+ colors. Here's a little howto:
1. Download DOSBox from http://home.arcor.de/h-a-l-9000/. This is crucial, as from what I see the game version does not support hires modes.
2. Replace game's dosbox.exe with the new version
3. Edit dosboxTimeshock.conf file, e.g.:
fullresolution=1680x1050 # your native res goes here
output=ddraw
machine=svga_s3
core=auto
cputype=auto
cycles=110000
acpect=true
4. Run the game and select appropriate resolution.
Notes:
- Machine types available: hercules, cga, tandy, pcjr, ega, vgaonly, svga_s3, svga_et3000, svga_et4000, svga_paradise, vesa_nolfb, vesa_oldvbe. You may want try some of them if svga_s3 doesn't work for you.
- cycles: 110000 works fine on Core 2 Duo @3.2 GHz, but you may want to decrease it if the game does not run fluently.
Sorry if such guide was already posted somewhere, but that's my first DOSBox game so I used to ignore such threads before :). Hopefully someone will find it useful.

With DOSBox that's shipped with the game (0.72) you simply can't choose higher resolutions (max is 800x600). Or at least I could't.
But does it have hires VESA modes available? I didn't try it, since it was hidden :)

it might be that hal added the modelines for a few vesa modes.
thought the defaults were 1024x768 max.
Will have to look it up as my pc can't handle such modes at a good speed.
edit: yes he adds a few modelines. Which ones do you select in the game ?
(and some fixes)

I use 1280x1024 (65k+ colors) which looks almost perfect on my LCD, but I saw that 1600x1200 was also available.

Doesn't work for me: the screen now is 1600x1200 as expected, but the Pinball graphics is now smaller and not fullscreen anymore (even if i set "fullscreen=true"). The effective resolution hasn't increased and the menu still ghostst the 2 highest resolutions.