You might find this interesting (or not!)
Taken from:
http://en.wikipedia.org/wiki/Anamorphic_widescreen#Anamorphic_lens_enhancement
<b>"Since the anamorphic widescreen standard for DVDs includes letterboxing for aspect ratios wider than 16:9, the display device will still lose some resolution to the display of black bars for wider formats such as 2.39:1 films. This wasted resolution can be eliminated by using a front projector in conjunction with an anamorphic lens and a video processor: first, the video processor or scaler (such as an HTPC) stretches the video up to the full resolution of the projector, eliminating the wasted resolution but also distorts the image vertically. As the distorted image is projected, it passes through an anamorphic lens which will either shrink the video vertically or expand it horizontally, restoring the original aspect ratio in both cases[2]. Depending on the quality of the scaler and the lens, the end result is potentially a smoother video due to increased vertical resolution. If the anamorphic lens shrinks the image vertically, there is an added advantage of increased brightness, since light output has been condensed. In contrast, an anamorphic lens which stretches the image horizontally will also decrease its brightness. A similar approach can be used to convert a 4:3 projector into a 16:9 projector[2], or a 16:9 projector into a 4:3 projector (by rotating an anamorphic lens by 90 degrees)."</b>
Not much use for lcd/plasma owners, lol.
On normal dvd's (still wating for the hd-dvd drive) the 360 has ten levels of zoom, not ideal but one of those will fit the screen. Being hd, I'd imagine that zooming in will be kinder on the pic than it would be zooming in on an sd dvd.
Whilst not being overly keen on black bars myself, I'm less keen on losing picture; widescreen tv's simply aren't <i>wide enough</i>
!
(sorry for the bloated post!)