There is no 1600 x 1200 Preset in PrE. [One can set up a Custom Sequence Preset to match that resolution in PrPro - just not in PrE), so the closest that one can do is choose one of the HD Presets, say 1920 x 1080 (note different Aspect Ratio), and then Scale, and effectively crop, that FRAPS footage. This can be done by selecting the Scale to Default Frame Size, or using the Fixed Effect>Motion>Scale, and the 1600 horizontal dimension will be Scaled up to 1920. The vertical dimension will be Scaled up (if you do not adjust the Aspect Ratio, and thus "squish" that dimension) to 1440. As your Project's Frame Size will be 1920 x 1080, you will effectively crop off 360 pixel from the vertical, and this can be adjusted with the Fixed Effect>Motion>Position, to crop from the top, the bottom, or both.
Within the Adobe family, the only alternatvies would be black bars, or move up to PrPro, and use a Custom Preset.
Good luck, and this ARTICLE offers some general tips for using Camtasia or FRAPS footage, just in case something in there is useful to you.
It took me three weeks, but I found a way to fix my problem without sacrificing the resolution I wanted - followed the tips in this thread, modifying them to work with elements 9: http://forums.adobe.com/thread/480309
Eventually, I was able to create my own project preset without using premiere pro, and it rendered my video perfectly.
I hope others will be able to benefit from this!