That's odd. I've had reports of it working on an M version. Are you running the standard firmware or custom? Its tricky to test all the variants as I only have the original model. I'll take a look at what I can do with the scaling in the code.
I have the RG350M and have a similar issue. If I run a game straight from the emulator it fits the screen fine, but if I launch a game from SimpleMenu, it displays in the bottom-left corner of the screen. However if I exit SimpleMenu, run a game from the emulator, then go back into SimpleMenu, they launch fine after that - until I shut down again, then the problem comes back.