This is pretty strange. I am not aware of a change to our handling non-native resolutions on an LVDS. What it kind of looks like is that you have not set your LVDS port for "fixed timing" on the LVDS port setting page of CED under "Panel Settings Page", and the driver is trying to keep options that fit the panels declared horizontal frequency which is higher on lower resolutions.. This is something we do to allow the display support flexibility we have on the embedded drivers. When the horizontal resolution stays the same, and the resolution drops, the vertical frequency goes up.
My recommendation would be to set the "Fixed Timing" which allows the driver to keep the output at the 1024 x 768 resolution that your LVDS panel can ONLY run at, and then use upscaling to allow lower resolutions to be displayed on the higher resolution panel.
On the main LVDS config page you likely will need to set "Use user-defined DTDs" as most LVDS panels do NOT support EDID and the driver needs to know what timings to use to support your panel. You leave "Use driver built-in standard timing" to allow the driver to offer Windows the lower standard resolutions even though technically the LVDS panel itself cannot accept those resolution. This is where Fixed timing and upscaling let us handle those non-native resolutions.
Once you lock all this down, it is my experience that you should get what you expect. If not, then something really unintended has happened with the driver on the 10.3 release and we will need to look at it.