You have to live with that!
SH3 does not support higher Res. If switching to a higher Res make sure that the y/x Ratio remains. Like from 10x20 to 20x40 and so on!
Exotic Widescreen Res will only be streched!
Me for example: I have hi-res 16:10 screen and I play SH3 with the standard game res with the filled up aspect ratio. Thus makin my dials also look oval.