So how do I go about setting VLC to display the highest resolution on my DVD but on a 4:3 screen and cropped, for example 1280x720 centered and cropped to 1024x768 so there's no loss in quality or scaling
It has been some time since I used VLC so will not be much help. You are much more likely to get help in the Home Theater Computers section, click here
I can tell you that DVDs do not have any of those resolutions so it will have to be scaled for those you want. If you intend to view on a 1.33 screen then I would get the pan & scan version if offered for 1.85 or 2.35 content. Many are offered in P&S or anamorphic.