3D means 3 dimensional, the way you see the world around you, showing depth and space (like F2 the inside view of your uboat, or from the bridge). 2d means 2 dimensional, which is like looking at a painting, it is allways flat. (like the F7 crew and compartment view, and all the instrument dials) The solution CapZap mentioned replaces a file that only fixes the scaling for the 3d view. It doesn't change the dials and other flat things drawn on the screen.
Personally I changed a setting in my graphics card properties to 'scale while maintaining aspect ratio' for games that wanted a lower resolution with 4:3 aspect ratio (ratio of horizontal and vertical size) This results in getting black bands on the side of your widescreen monitor, but I preffer it over a distorted screen. SH3 was made before these screens became popular, therefore it wasn't taken into account when it was developed.
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