You're looking for Size Game Window To, on the Settings, Interface window. This will make the game window smaller on your screen, not actually lowering the screen resolution of the monitor. AI War always runs in windowed mode, and doesn't support true fullscreen, which means that how it shows onscreen is based on the desktop resolution. This is a limitation based on the fact that we are currently using GDI+ to render the various menus in the game, and Direct3D under that to render the game under those menus.
Getting rid of those GDI windows is definitely on our hitlist for future improvements, but this is a very nontrivial thing to do with the textboxes, graphs, text areas, and so on and so forth. So we'll most likely address this when we are investigating doing a port to Unity early in 2011, as that has its own windowing system that provides the sorts of controls that right now we are getting from GDI.
Hope that helps!
