Perhaps I'm getting something completely wrong, but why do you think you have to switch to 1600x1200? You simply stay at 1920x1200, even though it's no 4:3 screenmode, put a checkmark to "keep aspect ratio" and have black bars to the left and and right. That's unavaoidable without distortions because your monitor is wider than 4:3.
I have a 1920x1200 monitor as well. My wrapper settings are like this:
[ ] window-mode
[x] captured mouse
[x] keep aspect ratio
[x] vertical sync
[no] fps-limit
[no] static size
[ ] window extras
[auto] refreshrate
[x] desktopresolution
Additional notes:
The vertical sync checkmark will sync the amount frame calculations with the frame rate of the monitor, as there's no need to calculate more of them.
If you want to play in windowed mode, activate it here, not via -w in the D2 command line, because by activating window extras, you can resize the window as you like.