Is it possible to change the resolution to 1280x1024? Seems odd that this was one of the options in Dem1, but isn`t in Dem2. 
It’s not. The game is fixed at 1024 768. I know some people will think that’s annoying, but the truth of the matter is that it vastly simplifies production of the game. That’s why so many ‘casual’ games are fixed res.
When your game is mostly a 3d world, changing the res is easy, as its just a few directx calls, but if your game is mostly GUI, it’s hell, because everything has to be rescaled smoothly and still look crisp and pixel perfect. Somehow, (possibly using vectors) stardock manage it, but sadly my engine isn’t as targeted towards scalable GUI as theirs.
But I know what you mean, in a perfect world it would have been resolution-independent.