Can games be run full screen ie 800x480?
No, not unless the game originally worked with that aspect ratio (so scales to 800*480 1:1).
I do not support scaling games in a non liner fashion. Sorry, that's just the way it is, at the moment I scale the screen 1:1 to get close to full screen.
If someone wants to hack in a non 1:1 scaler then by all means submit a patch but I won't be doing it

.
This may well change in time when the backend moves to OpenGLes (not a short term goal) as just scaling the surface to whatever may be needed is somewhat easier (I can just offer, "Full Screen (aspect)", Full Screen (stretch)" and "Unscaled (borders)" and be done with it

, let OpenGL worry about the specifics.
What I do plan to offer in time (i.e. not soon and maybe never

) is support for running the GUI on the full 800*480 screen (actually, this works but is disabled in the 1.2.0 releases as there are bugs). I may also add support for scaling games with 'Aspect Ratio Correction' off to more of the screen (i.e. 320*200 would have an option to get scaled to something like 768*480 rather than 640*400 with boarders at the bottom and sides).
None of this will get done with the 1.2.0 release.