That's right, Unity's resolution selection window doesn't work, you need to set the resolution manually.
-screen-fullscreen 1 -screen-width 1280 -screen-height 720
This will make it run at 1280x720 pixels fullscreen.
Ok, well, I'm not sure what might be causing that. I know some people get a delay when using Smartproplus to connect their radio, but with a USB dongle there generally shouldn't be any noticeable delay.