When I had my Z2 mated with the Panasonic S97S upconverting DVD player, I could use the Zoom button to cycle through the options. One of them would take the 480 image of the 2.35 movie and vertically stretch it to get rid of the black bars. The width was not changed so everything in the movie looked skinny. Then you would use the lens to make it look normal again. However, with the Z2 and S97S, I was unable to use this zoom option over DVD/HDMI, the signal was locked.
It is my understanding that the Z4 WILL stretch(scale) an incoming HDMI signal from either a upconverting DVD player or a HTPC that is running DVD software that does not have a built in stretch option like Theatertek.
I know at one point someone pointed me to the part in the manual where it talked about the additional ZOOM options on the Z4, that the Z3 or Z2 did not have.
The HTPC route would most likely cost more to build, but personally I think the scaling ability is much better as you can set your resolution to natively match that of the projector 1280 x 720. My HTPC has a Nvidia 6600GT which does a great job.
You may find it easier just to buy an OPPO or some other good upconverting DVD player. I'm not sure what will happen with these new HD DVD players in regards to 2.35 movies.
This stuff makes my head hurt.
