The underwater version is stil a WIP, but in the end it is planned to support other resolutions.
The fullscreen option should have worked for your resolution, not sure why it doesn't do anything - as you say.
I guess there must be a bug in there somewhere. :)
And you can't pass the fullscreen parameter in the command line yet.
But you can set the fullscreen to 1 in the Client\Data\GameData.dat file.
But from what you describe - I don't think it will make any difference.