Wasting? Those 8 bits are full of Alpha-goodness.

Anyway, it's unlikely to be memory related. It could very well be pixel clock related. Maybe that card can't run 1920x1200 with reduced blanking interval (that's how they go beyond the VESA spec) while driving the second display. I know a number of Matrox cards had crapppy configurations like this.

I don't remember a single ATI card with dual displays where you could not run the maximum resolution on both outputs in any situation.

Even a current cheapy card should be able to handle both displays at full resolution.

Check in the Advanced properties to make sure there isn't some setting on one of the tabs that artificially limits the maximum resolution.