I found it! There is a file called
C:\Program Files\Microsoft .NET Micro Framework\v4.1\Tools\Microsoft.SPOT.Emulator.Sample.SampleEmulator.exe.emulatorconfig
which contains XML configuration and you can change the following fragment:
<LcdDisplay id="mydisplay">
<Width>800</Width>
<Height>480</Height>
<BitsPerPixel>16</BitsPerPixel>
</LcdDisplay>
Now the emulator looks more like my 7" screen
Peter