I'm using the D2MultiRes mod. OS is Windows 7.
It works with any resolution your monitor can do, but the game is letterboxed to 4:3, and certain skills like the Sorc's teleport will be restricted in range for obvious balance reasons.
Your character, and the menu bar does get rather small. OTOH, it's awesome how much of the map there is to see! Feels like playing an RTS.