Hi.
I've been able to configure the game to play fluently on 1280x1024, 65000+ colors. Here's a little howto:
1. Download DOSBox from http://home.arcor.de/h-a-l-9000/. This is crucial, as from what I see the game version does not support hires modes.
2. Replace game's dosbox.exe with the new version
3. Edit dosboxTimeshock.conf file, e.g.:
fullresolution=1680x1050 # your native res goes here
output=ddraw
machine=svga_s3
core=auto
cputype=auto
cycles=110000
acpect=true
4. Run the game and select appropriate resolution.
Notes:
- Machine types available: hercules, cga, tandy, pcjr, ega, vgaonly, svga_s3, svga_et3000, svga_et4000, svga_paradise, vesa_nolfb, vesa_oldvbe. You may want try some of them if svga_s3 doesn't work for you.
- cycles: 110000 works fine on Core 2 Duo @3.2 GHz, but you may want to decrease it if the game does not run fluently.
Sorry if such guide was already posted somewhere, but that's my first DOSBox game so I used to ignore such threads before :). Hopefully someone will find it useful.

don't see what hal's build has to do with it.
that is a somewhat older version of the upcoming dosbox version.
you are suggesting to use svga_s3 which has been the hidden default of dosbox since 0.65

With DOSBox that's shipped with the game (0.72) you simply can't choose higher resolutions (max is 800x600). Or at least I could't.
But does it have hires VESA modes available? I didn't try it, since it was hidden :)

it might be that hal added the modelines for a few vesa modes.
thought the defaults were 1024x768 max.
Will have to look it up as my pc can't handle such modes at a good speed.
edit: yes he adds a few modelines. Which ones do you select in the game ?
(and some fixes)

Doesn't work for me: the screen now is 1600x1200 as expected, but the Pinball graphics is now smaller and not fullscreen anymore (even if i set "fullscreen=true"). The effective resolution hasn't increased and the menu still ghostst the 2 highest resolutions.