Try differen't resolution settings, do they have black space?
I'm not sure how old this America's Army game is, but newer games would stretch to fill the screen, such is the case with Fallout 3.
If the other resolutions still have black space, then that's probably how that game displays in those modes, and there's nothing you can do.
If that's the case, then you can try this:
Set the resolution to the max, 1200x800 in your case, then throtlle back the grapichs settings, like the texturings, smoothness, etc.
Also, open up the ATI CCC (Catylist Control Center) and tone down the display settings there too. If you don't have the CCC, go to ait.amd.com and download the full package for you
driver. This should be it:
ATI Catalystâ„¢ Mobility Display Driver
Uninstall your current ATI
driver, restart, then install this package and restart. Then lower the settings in the Advanced CCC.
That will help with your lag issue while in 1200x800.