Nope, not possible. You can do this with Linux, and I think OS X, but not Windows. If you had two computers and were using a KVM switch, that would work, you could also load a second copy of Windows into a virtual machine with it's own resolution... But so long as you only have the one machine, with the one copy of Windows, you're pretty much screwed.
You can also try the compatibility mode settings, but I think that only lets you specify 640x480 as a resolution. That may or may not be useful to you.
I am wondering if there is a way to set up 2 desktops on XP Home that each have different screen resolutions. I did try setting up 2 accounts (administrator and another) but when I change the resolution in 1 it changes the resolution in the other.
(I have a piece of software that is hinky with my large monitor resolution settings, which is why the need for 2 desktops). Would love to be spared adding another computer to solve the issue. Thanks.