There are plans in the works to better support higher resolutions, but you are right that in the meantime they should be filtered out (or at least a warning given).
You can manually set the resolution by editing the graphicsettings.lsx file in Wordpad, or other text editor, located in the folder:
C:/Users/ %username% /My Documents/Larian Studios/Dragon Commander
Alternately, deleting the file will get the game to recreate it the next time it is started, or the
[FAQ] Troubleshooting Dragon Commander & support topic has a default version of the file that will put the game in a lower resolution in windowed mode.
Look for the section
<node id="ConfigEntry">
<attribute id="MapKey" value="
ScreenHeight" type="22" />
<attribute id="Type" value="0" type="5" />
<attribute id="Value" value="
768" type="4" />
</node>
<node id="ConfigEntry">
<attribute id="MapKey" value="
ScreenWidth" type="22" />
<attribute id="Type" value="0" type="5" />
<attribute id="Value" value="
1024" type="4" />
</node>
Search for 'fake' near the start of the file to set the display mode (if both FakeFullscreen and Fullscreen are set to zero, it will be in Window mode).
<node id="ConfigEntry">
<attribute id="MapKey" value="
FakeFullscreenEnabled" type="22" />
<attribute id="Type" value="0" type="5" />
<attribute id="Value"
value="0" type="4" />
</node>
<node id="ConfigEntry">
<attribute id="MapKey" value="FrameCapFPS" type="22" />
<attribute id="Type" value="0" type="5" />
<attribute id="Value" value="60" type="4" />
</node>
<node id="ConfigEntry">
<attribute id="MapKey" value="
Fullscreen" type="22" />
<attribute id="Type" value="0" type="5" />
<attribute id="Value"
value="1" type="4" />
</node>
