Inform 7 discourages, but allows, the use of cover art that isn’t square. Are there interpreters (for Glulx, specifically) that will distort or otherwise improperly display non-square cover art? Glulxe displays it correctly.
The recommendation to use square cover art is so that lists of games with cover art will look nice. (That’s reason enough for me.) I don’t think there are any technical problems with non-square art, and if some interpreter has trouble with it, that’s a bug.
My guess would be that it’s more likely that people are just accustomed to a square format becauset that’s what you need to fit a CD jewel case (and, before that, an LP cover). Traditionally, a square format is considered not to be particularly attractive. If you look at the paintings hanging on the wall of an art museum, you will find very few of them to be square. Of the various film formats which have developed over the years for photography, only one is square, and photos which are shot in 6x6 are usually cropped to a rectangular format for their final use (unless that final use is an LP or CD cover). I think there’s a reason that, ever since the ancient Greeks, two-dimensional art is much more likely to take the shape of a rectangle which is pretty close to the “golden section,” rather than a square.
When you say ‘displays it correctly’, in what capacity is it displaying it? All I mean is - if you’re just telling the game to display an image, and it happens to be your cover image and it happens to be rectangular, the program won’t know that from any other image you told it to display, so it’ll be fine (as it is). Or are you using some particular cover image-related command?.. not that I think one exists, but I don’t know all.
Mac Zoom is the only interpreter I know that briefly flashes up the cover art of its own accord when the game starts (unless you tick a box to disable it), so it may be worth checking your image in Zoom.
Re: the squareness – my WIP has rectangular cover art, and in the large version of the cover image (960 x 960 or whatever it is) I letterboxed it with black bars top and bottom.
Then there was the separate issue of the image being crummily indecipherable when shrunk, which wasn’t a consequence of the letterboxing but in the nature of this image anyway. Basically I made a modified version of the cover art to suit the thumbnail square, with bigger clearer fonts so it remained legible, etc.
I feel I’ve proofed myself against everything now - the file is square no matter where it goes or how it’s used, but the large image displays correctly in its rectangle, and the thumbnail is more legible than most people’s.