yeah apparently it is soemting to do with the LCD having to manipulate the pixels in a different way to 800x600 that makes it look worse than just using 800x600. Try it and see but those extra 48 pixels in width really screw it up i think.
most people settle for 800x600. What pci card do you have? if it is nvidia it shoudl be able to get 800x400 from the drivers. If not give powerstrip a go.