By doing this you are only using roughly 2/3 of the pixels to display the image the rest are still displaying the black bars, though they are zoomed outside of the screen.
Ah, that's the piece of information I was overlooking. Makes sense now. My in-laws have a 2.35:1 screen, so even when we watch 1.78:1 material we have unused screen on the sides (we never stretch the image - blech!). I like the idea for a native anamorphic projector. Anybody know if they make anamorphic plasmas?
Thanks for the info Nick.