Does this mean that the only way to get the best performance from my setup is to use Advancemame?
No.
Advmame only works with SDL in windows. This means that advmame can only use the resolutions available to windows which in your case are the ones on the AVGA card. Only reason to use advmame (instead of regular mame) in windows is that it is more flexible when it comes to stretching.
I am having issues getting verticals to run properly (they get cut off ont he top and bottom.)
thanks
That is a fundamental property of arcade monitors and is independent of graphic card and software.
If you don't want to use stretch on vertical games, the only solution is to run them at another sync rate.
i.e. horizontal games runs on 15KHz and vertical games on 31KHz.
Unfortunatly the AVGA card only have a few >480 line modes so vertical games will not get the correct aspect ratio with that setup. You might be able to create some better modes with powerstrip but I am unsure if powerstrip works with AVGA.