Hey nomadpenguin,
the sansa clip v2 has a screenresolution of 128x64 pixels. Use WinFF (
http://www.winff.org) to convert your videos, use the Rockbox preset and set the video-size in the additional option window to 128x64.
I don't know, if it is possible to change the viewing area.
I must admit, that at first I was a little bit sceptical, if watching videos an such a tiny screen would make sense, but when I tried it, I have to say it's quite ok

best regards
c_k