Anytime you do anything on an LCD under native resolution, there will be distortion.
Lets say your monitors Native res is 1280x1024. That is how many physical pixels you have. Now, you put an image that is 1024x768 on that screen, every physical pixel is not displaying its own unique pixel. And since your res is not half, its not like each game pixel takes up 2 pixels on the screen...its unevenly distrobuted to make it work. This will lead to these wierd lines in your screen, thin lines become thick, and thick lines become thin in certain areas.
But, in game you probably wont notice, but look at your crosshair you will see what i mean. In general, native res is the best way to go, on an LCD. CRT's can do whatever.
if having distortion bothers you, you could turn off scaling altogether on the games that won't work at your native res. I have a 2001fp with a native res of 1600x1200, and have found that its not uncomfortable to play games at 1280x1024. That way you are using the native resolution, just not the entire screen. This does sort of defeat having a big screen, but if it is only on certain games or something, it might still be worth it.