You can force it to resize in one direction (x or y) by altering this code. I'll use the X direction as an example. Change this:
Code:
{include file="product_thumbnail.tpl" productid=$product.productid image_x=$product.image_x image_y=$product.image_y product=$product.product tmbn_url=$product.tmbn_url id="product_thumbnail"}
to this:
Code:
{include file="product_thumbnail.tpl" productid=$product.productid image_x=200 image_y=$product.image_y product=$product.product tmbn_url=$product.tmbn_url id="product_thumbnail"}