In reply to:
It may be that the picture will never strecth out fully sideways in Normal mode unless the input is 720i/p or 1080i. Anybody care to comment on that?
I also have the Panasonic TH42PWD6UY, and selecting "normal" on the Panny's remote always results in 4x3 ratio, with bars at the sides, regardless of what the input signal is. I don't consider it a problem; I think "normal" just means "4x3" to Panasonic, not "automatic adjustment to the input signal's ratio." For widescreen movies, I set the plasma to "full." That seems to display the movie across the entire width, sometimes with bars at the top and bottom, and without any distortion.
If there is a setting that allows the Panny to automatically select the display ratio, as expatbrit indicates, I haven't found it, but I plan to look when I get home tonight.