I like to run my monitor at 1280x768, and the Unreal Engine’s interface is far too large at this resolution. I’ve had similar problems with UE3 in the past. Any chance we can get a UI that scales with the user’s native resolution?
In the meantime, make sure you make those big icons small in the preferences.
Also since your resolution is low, I suggest you move the 2 panels at the right, to the left so instead of 4 panels you’ll have 2 tabbed ones.