ussnorway: is your desktop resolution (1920x1080) as well? that is 1080 pi
try setting it to 1366 X 768 or any other 16:9 ratio... that allows 1080pi which i what the game wants to be
to answer your main question - yes the game can run in older 720 pi format IF your system can display that ratio
[see image 720] but the steps depend on your system settings more than they do the game
step 1 set scale to 100% [see image scale 100] this is important because having a different scale changes how much work your gpu does
step 2 open your system display and check what other ratio options you have [see image display] a 720 is best but you can also fug that with 768 if your gpu can rendor
if wont work, most laptop gpus can at least do 1280 X 750 or 1280 X 768 [720] i.e any, 720 pi, ...
once your laptop setting has been made boot the game and change its ved options [see image 720 again] then close the game and reboot into it again;
notes 1 the first time you boot the game it may look work because older textures are still set to your old 1080 pi but when you change ved to 720 RESTART these errors should fix thhem selves
note 2 loading old saves made under your 1080 pi settings will take longer and you should hear your system working harder because again it has to recalulate the textures... once you enter each new area these textures should not need to be remade each time i.e, its more work it gets eaiser
final note; multiplayer will assume your on 1080 pi and kill you from casual hookups unless other players in the group are also running a 720 ratio but it does not tell you why it kicks you... more of a problem with Steam than Gog but be aware of it
Thanks a lot for your reply, I especially appreciate the pictures and clarifications!!
Following your advice, I lowered my desktop resolution, booted the game, and changed its res to match it - I tested with both 1600x900 and 1280x720.
Unfortunately, if I set my desktop back to 1980x1080, the game automatically reverses back to native resolution when I boot it again: it just won't let me select anything lower than my current resolution. I guess I'll have to change my desktop res manually each time before launching BG3, it's impractical but better than nothing.
Since a new patch is released every week or so I hope the devs will fix this small inconvenience at some point.