OK, seems a lot of widescreen LCD users are having this problem.
Before going to the trouble of installing the resolution fix (which is a pita for XP SP2 users and may not solve this problem anyway), simply check out your video card settings (via your video card's control panel). nVidia card users (and presumable ATI card users) who have correctly installed their monitor should have the ability to adjust flat panel scaling settings. The usual choices are:
1. Use scaling (default setting)
2. Use fixed aspect scaling
3. Use monitor's in-built scaling (your monitor may have scaling options of its own for you to tinker with)
4. Do not scale
Using #2 or #4 will see SH3 running in 4:3 format. The difference being that #2 will scale the image as large as possible to fill your monitor, but still maintaining a 4:3 ratio.
#1 (and #3 depending on your monitor's scaling settings) will stretch SH3. You'll find that #1 is usually the default setting.
I use #2 with my 22" LCD monitor (with the highest AA and AF to compensate for any up-scale "jaggies") as default for everything and have never experienced visual distortion with any application or game (granted not too many as I've only had this computer for a few weeks) - things that should display widescreen do, and things that shouldn't, don't.
FYI an example of my nVidia settings screen...
