Most of the old games looked just fine stretched. I'm playing MOO1 and MOO2 in Dosbox and they look great. Graphics card scaling or dosbox scaling makes them look way better too, rather than letting the LCD do the scaling :)
Actually it's not really. 320x200 did fill the whole screen on old 4:3 CRTs. The pixels weren't square, they were rectangular. The graphics were designed with the intention that they would be stretched vertically when actually displayed.
You can see this in the Betrayal at Krondor shot. Those should be circles, not ellipses. On an old monitor it would look like this:
vs
So you actually are playing it stretched even though it's a 16:10 resolution. DOSBox doesn't account for this particular quirk of old display standards.
Actually, the majority of DOS games were designed to run with square pixels, not tall ones. Exceptions exist, but most of the games had artists who were using square pixels and took for granted that they'd be tall once the art was displayed in 320x200 mode.
DOSBox doesn't account for this particular quirk of old display standards.
It can if you want. Edit dosbox.conf, set "fullresolution" to a 4:3 resolution, set "output" to overlay, and "aspect" to true.