I'm in the process of acquiring a 17" HP L1740 LCD Monitor (5:4, 1280x1024). I've been doing lots of research on the internet and to my knowledge Mode 13 or 320x200 images are actually upscaled and displayed as 720x400 images at 70Hz refresh rate. Now, since you will be most likely be using a VGA input on a DOS-machine these 720x400 images also get upscaled to your native resolution and fills the entire screen (unless of course you have some sort o f 4:3 switch on monitor). As an experiment, I played around with some 320x200 screenshots of DOS games and I upscaled them using GIMP. I didn't use any graphical enhancements to "improve" the quality of the scale. So, just to outline the procedure I followed:
1. I first upscaled the 320x200 image to 720x400,
2. I then upscaled the 720x400 image to 1280x1024 (since that is the native resolution of my HP 1740 monitor).
Since 18.5" 1366x768 LCD monitors are readily available, with the Philips model being known to have a 4:3 switch, I also followed a similar procedure to produce 1024x768 upscales of the images. I did not recreate the black bars, so you'll have to use a bit of imagination. It's also been well established that 1366x768 is not even close to producing a correct aspect ratio of the image, so I didn't even bother with that resolution.
Here are the results for the 1280x1024 vs 1024x768 upscales:
Blood (1280x1024 vs 1024x768):

Doom 2 (1280x1024 vs 1024x768):

Commander Keen 4 (1280x1024):

Raptor: Call of the Shadows (1280x1024):

The Dig (1280x1024 vs 1024x768):

To my very subjective eye, there doesn't seem to be a significant difference in terms of the theoretical quality of the images. Phil's photos that he took of his monitors also provides great insights. I will also take some photos as soon as my monitor arrives.