if you have a keyboard or mouse plugged in (or wirelessly connected), close the pbook (to sleep), plug in the screen, presss a mouse button or key (make sure 'allow bluetooth devices to wake this computer' if applicable). this should wake the powerbook in docked mode (or some other silly pointless name like that). viola! your powerbook is in single screen mode and it's not the powerbooks screen.
as for the res, your mac should interface with the attached screen(s) and ask what resolutions theyre capable of displaying, then only these resolutions will be available to the user. if video mirroring is on (sometimes even if the 'book is closed its screen will be on but mirrored- weird), the 17 will be restricted to the same resolutions as the 12 so you have to make sure only the 17 is being used. if all youre using is the 17 the display menu should show all of its resolutions, not just the 1024x768 of your pb.