from what I have heard, you have to manually create the changes, both to the images and xml files.
I have yet to dive into it, but I definately want to customize my screen for 800 x 480. Check here
It's really not that hard... just time consuming. If you don't have it already, go download the trial version of PaintShopPro. Then go through each of the images and resize them to whatever dimensions you want. Then, in PSP, use the SELECT tool to draw boxes around each button/hot-spot/clickable-area and note the X,Y, length and width. Put those values into the appropriate spots in the skin.xml file.
There's probably a better tool out there, something for automatically making image maps or something, but I haven't looked around much.
if displayed on a non widescreen monitor... If you run 1024x768 or 800x600 (4:3) on a widescreen monitor, it should look normal and stretch back out... Currently I only have Blue Ice in WS format... I have viewed fullscreen on a 4:3 monitor, especially smaller screens, and it doesn't look that bad...