Ok, I ran Pacman at 252x288, and it leaves me with about a half-inch portion of the screen cut off at the bottom (which I find completely acceptable, personally - these game were pretty much unplayable for me in the past back in my trident blade days). And I have to play with the vertical size and v-hold of the monitor also.

One thing that I noticed before is that if you set up a vertical game (like pacman) to play on your monitor rotated 90 degrees, it displays perfectly (which makes sense, because I'm guessing that the ArcadeVGA supports the actual arcade resolutions vertically, but displaying them horizontally is NOT using normal arcade resolution).
It looked a lot worse before I learned about the 50khz-60khz pot on the monitor.
If you're looking to get a picture that looks like mine, try getting rid of Gavin's Pacman .ini & try running:
mame pacman -ddraw -switchres -switchbpp -nohwstretch
I wonder if you would get the same results as me?