Not only the VICII allowed that, also the VICI...
You can see various effects on demos from many Groups in the C64 scene. Also they are mainly PAL ones, the scene in NTSC using world wasnt that active - or say better not in the time i was into it ;)
For the border itself, i think it depends on the settings of the monitor used and on PAL/NTSC machine. If you would know (i dunno, but maybe you know it) the CBM 1802 and the 1084... the border on both is a bit diffenrent. You have a a bigger border down than on the 1802.
My guess would be that all games should be able to run on both NTSC/PAL without resolution issues. Thats where the border comes in. Its big enough to cover that up.
BUT: im not sure on this info, maybe other ppl with more knowledge can jump in and correct me.
'Now the time is here
for Iron Man to spread fear,
Vengeance from the grave
kills the people he once saved'
© Black Sabbath '70
*grunt* Metal *gnarf*