It is quite simple to get higher resolutions - in section Monitor of /etc/X11/xorg.conf we have to set horizontal and vertical refresh rates. By default these values are set to lowest, safe area.
Here are my settings:
Section "Monitor"
Identifier "Monitor0"
VendorName "Monitor Vendor"
ModelName "Monitor Model"
HorizSync 42.0 - 80.0
VertRefresh 55.0 - 100.0
EndSectionX.org is able to work at 1280x1024 with vertical refresh rate 75Hz. HTH