I have not tried the overscan option yet... but I will. The miggy is down for a bit while I get this new-fangled flash drive hooked up. The thing is, the border is not black, it's gray like the window backgrounds. It's just the mouse and windows are all constrained to a smaller area. I'll get a pic up soon and you guys can see.
I use a couple of Viewsonic 1920x1080 LCDs with my Amigas. Native modes are scaled and streched so that the almost fill the whole display. As people here have suggested, use the Overscan for workbench, make the biggest display you can and use the "auto adjust" if your monitor has one or center the screen manually.
If you have an IndivisionAGA then look for Ratte's widescreen monitor driver. It will give you a good 1280x768 in 256 colours (IIRC) that scales quite nicely.
That said, my 32bit 1920x1080 looks stunning via my Radeon card.
