Many systems don't have square pixels. You'll either end up with "stretched" screenshots if you preserve the original pixels, or "blurry" screenshots if you stretch the pixels non-proportionally to get the correct aspect ratio.
So what do I do? Is this just something I'll have to live with or can the rom be re-dumped to fix it? (Not saying that it should be dumped right this minute)
There's nothing to fix. The original system did not produce square pixels. This is true of many if not most arcade systems, and also many PC video modes. For example CGA 320*200 and VGA 640*400 resolutions, when stretched to fit a standard 4*3 display, have pixels that are taller than they are wide. The Macintosh was the odd one out for only using video modes with square pixels, even the Apple Lisa didn't have square pixels.
You have to decide whether you want the original pixels from the system, which will give you an image at a different aspect ratio, which you're calling "stretched", or you want it resampled to the intended aspect ratio and filtered, which you're calling "blurry". You're not going to get square pixels at the correct aspect ratio from a system that doesn't produce square pixels at the correct aspect ratio.