Is there any way to increase resolution for U7, the resolution GOG has set is quite frankly terrible, cannot discern easily what an object is.

Thanks for any help!

Ultima VII doesn't support higher resolutions by itself. You can use Exult to play both games at higher resolutions with some optional gameplay improvements.

yeah.. exult is fantastic compared to not using it :)
http://exult.sourceforge.net/snapshots/Exultwin32.exe
link for windows versions up to 7.
i got 1280x800 full screen with that.
there are older versions like 1.4.9rc1 from sourceforge that are okay too I guess.
also with exult you can take a mod called Black Gate keyring and another for part 2,
which do some nice improvements, I got the BG keyring installed now. The mods require the latest Exult version.

Don't use any Exult version below 1.5.x, there is a nasty bug that makes things randomly disappear. It can happen to anything, items, NPC, entire buildings. Just use the latest snapshot from their site and you should be fine. It says "unstable", but that shouldn't matter.