After I implement your solution (and I will) and when I am working in development mode - what screen resolution should I use? or does it matter?

Nope - doesn't matter.

And - when I am in development mode and I'm building a form I want to cover the whole screen - what width and height should I use for the forms?

Again, it doesn;t matter. However, keep in mind that if you design forms for a 10 x 7 area and your client is running at 640 x 480, it may make the form impossible to use < s >.