Have you tried it in "high resolution" mode?
Basically "high resolution" mode lies to the OS and tells it the DPI is lower. It has nothing to do with resolution at all in fact. I believe it gets set to 160 DPI, which corresponds to:
Diagonal dots = sqrt(1280^2+800^2) = 1509
1509 dots / (160 dots per inch) = 9.43 inches.
That's why everything ends up smaller - the OS is rendering as if you have a 9.4" tablet but it's squeezed into our 7" screen. But on the upside it activates the tablet interface of most apps. In regular mode it gives an honest density of 213 DPI but for whatever reason many apps interpret this as a cue to go into "big phone" mode rather than tablet.
Also I noticed that apps which don't fill the screen properly (bad developer! bad!) often don't show the full screen stretch option in regular mode, but it's offered in high-res mode.