I go one step further and re-crop the clips so that I can have my stuff in 16:9 because those black bars on the sides drive me batty.
So THAT'S how you get your 16:9 footage. It always looks nice, no distortion at all. But I think I'd rather stick with my ol' 4:3 and not have to crop every single clip. Maybe I'll think differently if I ever put my nose to the grindstone and learn to use Sony Vegas.