Comment 3 for bug 874241

So, what's going on here is that the display manager is setting the displays to mirrored. In X, 'mirror' means 'find a common resolution supported by both monitors'. Unfortunately, in cases where the aspect ratio of the two displays differ, there will be zero XxY resolutions they have in common, and so X has to select the default VESA mode of 1024x768 (or one of the smaller required modes like 640x480 or worse).

While this is the expected behavior, you're right that it looks really bad, and since it's the first thing people see it gives a poor impression. Certainly doesn't fill one with confidence that multihead in unity is going to work well.

Unfortunately, most options to solve this have fairly nasty corner cases that can leave users with an unusable system, or at least extremely confused. So, I agree this is a bad problem, just not sure how it should be fixed.

Fwiw, I experimented with scaling the external monitor while it is at 1024x768:

  xrandr --output HDMI2 --scale 1.333333x1

and that looked better. However the text looked bad (mis-hinted?) and it did nothing for the black bars on the laptop display, so this isn't even a viable workaround.