I'd love to be educated as to what's going on internally in Groovy when it picks one or the other resolutions. At 640x480 it's a blurry mess (with or without fake scanlines), but at 1600x480 it's incredible. I remember you mentioning you'd like to experiment with super wide horizontal resolutions - well at 5 x 320 width the picture is flawless. I'd like to try some slightly lower resolutions just to see where the sweet spot is, if there are any recommendations I'll give them a go.
That makes sense now you see?
Well, let's say GroovyMAME has been programmed to hate fractional stretching, it will always try to solve things with integer scaling, and only use fractional as a last resource.
So say you have only 640x480 available. Now you lauch a Capcom game, 384x224. GM tries fitting the vertical size before. The vertical is always our priority with CRTs. So it turns out that 224 x 2 = 448, wich leaves reasonable borders inside a 480 lines mode. So it passes the filter.
Now let's try on the horizontal. You have to choices:
a) 384 in 640, which leaves 128 pixels wide black borders on each side, ruining aspect
b) 384 x 2 = 768, which doesn't fit
That's why GM decides there's no possible compromise with this situation and switches to fractional scaling.
The new thing that will be implemented is, considering the above situation, that GM would use a mixed mode: integer on the vertical and fractional on the horizontal.
The cool part about this is that as long as your GPU can handle a custom resolution of quite big on the horizontal, you should be able to use ANY card for Groovy in 31k and achieve a great result, not just an ATI - am I correct?
Yes, indeed. It's just that for most of us running all games at 60 Hz is not exactly what we call a "great result". Especially when you have the power to use native refresh rates in your hands. But that's a different story

So I'm glad that using "super resolutions" (ultra wide resoltions) works so good. You'll be noticing a slight difference in the size of the borders as the scaling can't result in full resolution for all original modes. I believe that provided the horizontal resolution used is high enough, one could scale any resolution to fill the screen horizontally without any visible blur, as long as the vertical is integer scaled. The CRT should hide the effect. This will come handy if we ever move to Windows 7 in a future, as magic resolutions won't work for Windows 7, and we need to keep the amount of modes low due to HS tyranny.