Your card will struggle a little. If you have any AA/AF forced through the GFX Control panel you can afford to reduce it a bit as by default a higher rez will decrease 'jaggies'.
Generally speaking though I experienced better FPS performance after I put SH3 to my native desktop resolution. This actually holds true for many games (I'm not sure why).
I think SH3 will automatically correct the resolution to 1280 x 960. Stoopid fixed aspect.
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