FRUA plays in full-screen unless you use DOSBox (and then you can still go full screen). When viewed full screen, the normally square viewport distorts to appear to be the same dimensions as DC (which is how DC ended up with the rectangle).
I think perhaps you guys were thinking of designers preferring to use 640x480, as opposed to players. As DC plays full screen no matter what resolution...
I do grant for designing in DC that they may indeed prefer the smaller resolution for the reasons you mentioned and that there are just less pixels to worry about.
On a semi-related note, it looks like CocoaSpud's effort while it didn't work in .914 does work in the new version of DC.
Here's my initial effort at a new, larger, square viewport (the green area) that is the same width as the viewport for 800x600 so figuring walls should be easier.
If anyone's interested, I'd be more than happy to share my config.txt file. Note: this won't work as well in .914 as 'HP' will likely not be viewable.