I checked POSTAL.INI but see no entry for windowed mode.

Any way to start Linux version in windowed mode?

For any future folk who want to play in Windowed on Linux, there's a "StartupFullscreen=" line in the .ini, set it to "StartupFullscreen=False" if you'd like the game to boot in Windowed mode.

I found the solution (after 3 years) from Steam forum: run postal1 with options --windowed . For other resolution, use option --resolution.

For example, I use:

cd PostalClassic/game
./postal1 --windowed --resolution 1600x900

PS: I guess I can't mark my own post as solution. Oh well.