Correction to your guide: there is no need to install Lua 5.2. We are actually using LuaJIT which is downloaded when you run "make fetchthirdparty", so it makes no difference which version of Lua (if any) you are running on the host machine.
Concerning the resolution issue: I just run nvidia-settings and it lets me configure a metamode 1920x1600 with the physical resolution of 1920x1200. I assumed that the other graphics cards and OSes have a similar capability. Are you saying that Windows 7 does not have a concept of virtual screen, i.e. screen with the size bigger than physical resolution?