Any reason why the ArcadeVGA MAME Resolution Tool seems to have the resolutions wrong? 
It hasn't

MAME lists the resolutions 'the wrong way around' for vertical games. Take your example, PacMan, it runs on a vertical screen (ie more vertical lines than horizontal), so think about it and the resolution isn't really 288x224, but 224x288.
352x288 is a good resolution for PacMan on a horizontal screen - the difference between 352 and 224 accounts for the black borders at the left and right of the screen (not present if the screen is vertically orientated). See ArcadeVGA.txt and I think it even describes this mode and one or two others as 'vertical on horizontal screen' or similar.
I'm guessing the 'cropping' you're referring to is at the top/bottom of the screen? This is because 288 lines is a lot of lines to display (most horizontal games only use ~240). Adjust your vertical size and the game should fit on the screen.
I don't understand why when you set it to 288x224 it looks perfect. My guess is that this resolution isn't actually available so MAME is defaulting to whatever you have in your mame.ini (or is using resolution auto with good result). Either that or hwstretch is being used to squeeze the game in...