maybe that game specifically just didn't support higher resolutions
Doesn't the PS3 automatically upscale the games? I don't really know how that works, so I guess it might just not work with this game.
Check the disc on a PS2 and see if it is the disc or not if you have a PS2
Damn, I don't have too many friends with PS2s anymore, but I guess this is worth a try.
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http://i.imgur.com/8qeH8.png
http://i47.tinypic.com/29yjh4o.png