Thank you. Actually I don't mind cropping because the same principle applies whether using an xvid or standard mpeg2. That is, I want a compromize between moderate cropping and moderate distortion. If I crop a little off the top and bottom, then maybe I don't need to use a strengh of 3 and hence there is less disortion needed to achieve the same screen coverage.

You have a point about the blackbars being a waste. By expanding the vertical resolution with 640x384, I end up with minor pillar boxes anyway because it will place a 1.66 video on a 1.78 AR screen. So this way I don't waste bitrate whereas by adding blackbars I Xvid ends up allocating cpu cycles for nothing. The only drawback to this is that the center portion of the screen will be distorted vertically a little.