Instructions on how to do it here.
I tested it and it works like a charm. I'm running gog's version of GK3 @1920X1200 and it looks great.
Naturally, people who aren't confortable with editing the registry should be carefull...

Or you can use the resolution utility that I made for my GK3 installer.
http://sierrahelp.com/Games/GabrielKnight/GK3Help.html#GK3Config

Thanks, i didn't know about it, but i'm guessing it will make changing resolution less problematic. I'll give it a try.
Edit: 1920X1200 isn't listed. Is that because it's my current resolution (i still haven't undone the registry hack) or there really isn't an option for it ?

That is the resolution that I use for my desktop, too. I only listed resolutions that the engine supports. My installer will set the game to run at the user's current resolution. If that resolution is not supported, the game will revert to 640x480. They can then use my config tool to select another resolution. I have been thinking about adding an option to run the game in a Window.

One quick question for Namur (or whomever) ... You said the 1920X1200 looked great when you originally did it. 1920X1200 is my resolution as well and it would be great to run it at that so which way do you guys recommend going?

Well, Collector's tool certainly makes things easyer, since you don't have to manually edit the registry. I just changed GK'3 resolution with his tool a couple of times and it works great.
As for the 1920X1200, if i understood Collector correctly, there's no way to use the tool for that one, so you'll have to do it manually. If you decide doing it manually just make sure you know what you're doing, ok ?
Or you can just use Collector's tool and go with 1680X1050. GK3 also looks great and no manual registry hack is required, so this one's probably the best option.
The attached pic shows the game running at 1680X1050 on my desktop (native 1920X1200)
Keep in mind that the lighting effects (probably other effects too) are not present in the pic, so in game with proper lighting it looks alot better.

I have a new version up. This one corrects a mistake in one of the resolutions and adds the ability to run the game in a window. Note that you will need to set your color depth down to 24-bit or high color to allow you to run it in a window. If I can find a way to set the color depth from the command line on Win7, I'll add this ability to it to automate it.
Edit: I just tried 1920X1200 and it worked. For some reason when I first wrote the utility on Vista, the game would complain that that resolution was not supported. On the same machine with Windows 7 it works. Odd. Anyway, I added 1920X1200 to it. Just use the same link from above.

That's awesome! Thank You!
Edit: yep, it's great. No more fiddling with the registry to get 1920x1200.
Small typo, it appears listed as 1920x2000 instead of 1920x1200.
Thanks Collector. Much appreciated.

Thanks for the catch. Typo has been fixed.

I got it to work as well, but had to use the regedit option. Not sure why the utility did not work. Thanks all!

Maybe try to tick the 'run as admin' on the game shortcut and then run the tool with a right click > 'run as admin' instead of a double click. That's basically all i did.

You could always run GK3 in a window by launching it with the undocumented -window command-line parameter.
In the days of the original release, people tried running it in higher resolutions, but the problems was that in the sequences where Grace uses the computer, the scenes use static bitmaps that could not change their resolution.