Thanks Mr Do, this works!
An interesting side effect is that by using the .lay file to set exact "screen" dimensions, it is possible to recreate the effect of the long lost "cleanstretch" (integer scaling) feature, while still using D3D. (usually, this is only an option for slow old DirectDraw mode)
So for Street Fighter II I'm using "screen" width="1152" height="896" (exact multiples of the 384x224 naitive resolution of the game). Looks great on my 1080p screen.