Anyone have this run correctly? On my machine it mangles the image quite badly but runs smoothly enough with the software renderer, even at max res. It's not game-breaking by any means, for me at least (I have a Phenom II so, cpu time to burn) but it does seem like a bug or at the very least, 'an issue'.

Same thing for me. Hardware 3D ruins all text so that I can't read anything. But hardware 3D works fine in Tropico 2 Pirates Cove.
I have to admit that the software mode looks decent but I was hoping to jack up the 3D settings in the Nvidia control panel to try to improve the appearance even more. This kind of thing should be disclosed before purchase even if it isn't a gamebreaker.

Due to the way the game is rendered, hardware rendering won't really increase the image quality, regardless of how high you pump up the settings in your graphics card control panel. It's just showing 2D sprites on top of each other. The hardware rendering was helpful back in the day for slow CPUs, but with modern CPUs, it doesn't give you any benefit. Keep in mind that these are old games.

Thank you. I didn't know that part about the 2D sprites. That explains why I didn't see any difference between the hardware and software modes, other than the messed up text.
Like I said, the software mode looks pretty good. In fact it surprised me.

I had to turn my display down to 800x600 just to get into the game and be able to set the hardware acceleration on, then returned my display to normal res. Anyone else with ATI graphics hardware may need to do the same as the darn ATI window kept taking focus and insisting that I run the game in higher res.

Also, I recall when the game was new that the hardware rendering looked harsh to me. Software rendering looked better, but could bog down a machine back then.

Most of the game is 2D anyway. Buildings and scenery items are isometric, while the Tropicans are good ole' 2D sprites. It's so well done that it looks like 3D, but it isn't. The only true 3D is the terrain, and it's so simple that it doesn't require any hardware setting.
I suspect that the 3D option is nothing more than marketing.

This is not the case, as strstrep pointed out earlier.
Tropico 1 was released in 2001, around the same time that the GeForce2 cards were wildly popular and GeForce3 had just been released. These cards were very powerful, especially when dealing with multimedia operations, compared to CPUs of the time.
This trend has actually continued and is far from "marketing" - most 2D games (even Popcap games) are now built on 3D engines, and will run on these engines faster than they could using 2D primitives.

I think the boats and planes are 3D. You have to zoom in all the way to actually notice it. Everything else is sprite-based.

Actually, there is quite a difference between the software and hardware modes.

Notice how the water-land transition is much smoother in hardware mode. The buildings that are not yet built are also rendered differently - in software mode you can visually tell how much work has been done (the house on the screen is about half built).
Strangely, the shadows look much nicer in software mode (notice the shadow from the ship). And the water in software mode is animated, while in hardware mode it's static.

There were also some differences in texture rendering of 3d models (ships, for example) on my older hardware - in software mode they were much more "blocky".
Also, notice how the clouds are much prettier in hardware mode.

I'm just disapointed I can't push the res above 1280 because of my 23" 16/9 screen. :P

It's much, much later ... and funnily enough I came across this thread when looking for solutions to the very same issue (go figure!).

So, if anyone is curious, Tropico 1 works in 3D hardware mode with "WineD3D for Windows" (I'm using v 5.4), which can be found here: https://fdossena.com/?p=wined3d/index.frag

Edit: As an addendum, it makes a slight difference to some things, improves the water, arguably, but is actually a little slower than just letting my processor handle the built-in renderer. My recommendation is to run the software renderer, in all honesty, but this was a technical challenge for me, as much as anything.