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Found this snippet of info in my travels across the net on how to set custom resolutions for Two Worlds

Run or type "regedit" into the start menu if your on Windows Vista or 7
Go to the following
HKEY_CURRENT_USER\Software\Reality Pump\TwoWorlds2\Graphics
Within there is a selectable width and height along with fullscreen or not.

Please remember to backup the original values when ever editing the windows registry by right clicking the part your gonna edit then export. the values are in Hexadecimal so you will want to click Decimal first and type in the size you want.... say 854 and then click Hexadecimal and it will convert it for you.