I've tried a couple more times and here are my conclusions:
- Equirectangular panorama renders always 360x180 degrees image, so to ensure that our render is not "squished", render aspect ratio must always be 2x1 (width, height)
- Right now there's no way to make it 360x20 degrees (Blender 2.71)
- If you are desperate for 360x20 (like me), you'll have to use Gimp or other tool to cut 1/9 of your rendered image.
- It is very inefficient, so be prepared (1080px high panorama requires rendering of 19440x9720px image, which you'll have to cut to 19440x1080px)
If someone has a more efficient way of dealing with this problem (or I've made a mistake at some point), I'd be happy to hear about it.