Is it possible to have a higher that native resolution in a guest operating system? (with higher resolution scaled down smoothly, so it would be usable)
The Parallels Video Adapter uses the same set of screen resolutions visible in the Mac Display Preferences. You can add more resolutions to Mac OS X with something like SwitchRes X but I believe for LCD screens, resolutions greater than the native resolution of the LCD screen are not activated by Mac OS X after startup. Parallels scales down higher resolutions when in Window mode and Dynamic Resolution Tool (part of Parallels Tools) is not installed. There is no way to disable Dynamic Resolution Tool without uninstalling all of Parallels Tools. Parallels also scales down higher resolutions when in Modality mode even if Parallels Tools is installed. Just set the opacity to 100% Opaque in the Modality settings and turn off the "Keep on top of other windows" option. The problem with Modality is that there is no Parallels device bar at the bottom of the window, and sometimes clicks go through the window unless Parallels Desktop is in front. Parallels should allow the user to create custom resolutions that differ from the Mac OS resolutions. Scaling should be made to work for Full Screen mode too. Parallels should also add an option to disable the Dynamic Resolution Tool.