> Should an emulator always display it's output at the complete size of the
> screen?
> And let's say the emulator has a screen of 256x256 of which 256x224 is visible,
> should then only the visible area always be stretched to the size of the screen,
> or the whole 256x256 screen?
> I'm guessing it also depends on the used monitor/video hardware of the original
> machines (arcades in my case), but is there a general rule of thumb?

It depends on the video hardware and the monitor (and monitor settings). Pixels can have any aspect ratio, but almost all arcade games use 4:3 monitors, so scaling to image to a 4:3 ratio is correct for almsot all games.