Firstly you don't need to start a new thread when everything you are asking is related...
I just tried it, and for me 352x288 works fine (except refresh rate*), and 288x224 makes the game appear on a fraction (~1/4) of the screen (centered). I just have a 15khz screen but I can tell the game is not truly running at 288x224, looks like 640x480 to me (I can tell from the interlace flicker). Since you have a multisync, perhaps yours is running at 640x480 too - you wouldn't get the flicker I do.
* 352x288 runs at ~50hz, whereas PacMan runs at ~61hz, so I lose frames. Note that I have the old version of the ArcadeVGA, I think the new one may address this issue (and run @ 60hz).