Not exactly, for 1.33, 1.78(HD), and 1.85 DVDs, the lens has a "pass through" mode. In other words, it is like there is no lens present. My projector is native 16:9, so there would be no reason to alter the image.
When you watch a 2.35 movie, you have black bars on the top/bottom, so you have to first scale the image to get rid of the black bars and reclaim those lost pixels, then you put the lens in stretch mode to stretch the previously scaled image back out to fill the 2.35 screen.