I found the solution.
First things first, for a 1080p file 848x480 works fine. Selecting "keep aspect ratio" at with the 848 width automatically puts in the 480, so no distortion.
The problem was the 'cropping' setting to the right of the resolution. On automatic, it wanted to crop 140' off the top/bottom by default... not sure why. Black bars perhaps? Anyway, setting it to custom and putting cropping out 0 gave me the desired resolution.
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