I've found a widescreen fix that lets me play the game. https://github.com/ThirteenAG/WidescreenFixesPack/releases/tag/gta3

Can I use it during runs or is it prohibited?

its not allowed, i'd recommend you to keep the widescreen setting off

You don't have to have a widescreen fix to be able to play the game. All modifications beside these are banned: https://www.speedrun.com/gtaiii/thread/c1ct5

Thanks for the response, I've had widescreen off but couldnt play game without a fix but with DXWnd after few painful battles with the program I've managed to get it to work. Thanks for the fast response <3