OK folks here is the theory behind this. These monitors (at least my Xenarc 7") don't support EDID, which is a method for the monitor itself to tell the graphics card what timings it supports. The Intel driver has a bunch of built-in timings that it uses by default when it encounters a monitor without EDID, apparently. These default timings of course don't include 800x480.
However, by specifying certain registry entries, you can tell the debug Intel driver in the Embedded Drivers kit (but NOT the release Extreme drivers, I think) NOT to use the default timings and instead use timings that YOU supply. These registry entriesare defined in the documentation included with the kit.
The necessary registry entries consist of some values to force the driver to override its defaults, and the timing data itself. The PowerStrip screenshot in the FAQ section at the Xenarc web page gave me the timings I needed to get 800x480 out of my Xenarc monitor. The Intel driver wants the data in a slightly different format, but conversion was easy. There were two values I didn't understand (HorizSize and VertSize), so I took examples from the Intel documentation (luckily they had one for horizontal at 800 and vertical at 480) and they worked.
I've included a screenshot of my desktop with PowerStrip open to demonstrate that I've (almost) exactly matched the canonical timings from the Xenarc site. Of course by forcing this timing you cannot change FROM 800x480 because the driver is telling Windows that there ARE no other resolutions, but who cares. It looks spectacular, so much better than ugly scaled 800x600.
If you've got a different monitor than the Xenarc 7", you're on your own. These timings may or may not work for you. You'll have to dig up the actual timings from the manufacturer or whatever and convert them yourself.
I've included the .reg file containing the registry changes. Note that THIS REGISTRY FILE WILL NOT WORK FOR YOU AS-IS. Follow these (completely untested by anyone else) directions:
1. Download the Intel Embedded Drivers kit from here and unzip it:
2. UNINSTALL your existing Intel Extreme drivers and reboot. You must reboot now.
3. Run Setup.exe from the Utilities directory and choose to install the driver. Don't reboot yet.
4. Open my .reg file in a text editor. Notice that in the pathname of the registry keys in my .reg file you'll see a GUID. This GUID is different for every installation. To find out what it is on your machine, open Regedit and browse to:
Under there will be some registry key whose name is the GUID, which has a subkey named '0000' that contains a value named 'Device Description' that is set to this string:
"Intel Corporation 865 Embedded Graphics Driver"
This is the key you will be modifying. Take the GUID from the name of this key and overwrite the old GUIDs in my .reg file with it.
Good luck. Hopefully others can expand upon and improve this extremely hacky method. If you don't have an 865 chipset but some other 8xx chipset from Intel, you maybe have to perform more extensive modification of the .reg file. Use the brain that God gave you.