Here's what worked for me:
- In eclipse, go Run -> Run configurations.
- Select the Target tab.
- In the Additional Emulator Command Line Optionsfield type-skin 320x480or some other resolution appropriate for you.
- Click "Apply" button.
- Click the "Run" button.
I tried the -scale 0.8 option but it didn't work well because although the screen size was reduced, the color looked like 8 bit color... or worse. It was entirely unusable since the flash screen was almost entirely white. 
The -skin 320x480 option produced an emulator of an appropriate size with no graphics issues.