Either way I look at it, it would not work because your width is also contained. For example you happen to have an image that is so wide that it goes out of the container, it would break the layout...so that doesn't work...
All in all, I think you should settle with small thumbnails cropped...This is OK...because remember you're in list view...if people want to see the full image, they simply clicked into the detail of the product and from there they can see a bigger image and a fullscreen lightbox if they want.