Firstly your monitor have to support it of course or you will either burn out the monitor or lock it up by going out of frequenzy bounds (most likely the latter, heh).
Secondly use a program such as ReForce (yes works with ATI too) to unlock all refresh rate settings and resolutions.
I know how to do it with an nVidia card and ForceWare drivers. You'll need a pretty decent monitor for it to work with 120 Hz at 1280x1024 though. What card are you using?
Then you'll have all sorts of tabs at the top, click on monitor, then you should have a drop down box to select frequency. There ya go.
though i would follow the other peoples advice on checking to see if your monitor can handle that refresh rate. You might end up killing it if it doesn't.
Well, to be honest I like to have a sensitive mouse. And as you know, the mouse is much more sensitive at high refresh rates.
I used to run 1280x1024 @ 120Hz, then after I installed my monitor drivers via windows update it only went up to 85Hz. Oh well, better safe than sorry.