Puggo - Jar Jar's Yoda said:
The question is, should I choose 4:3 or 16:9.
In TMPGEnc (I'm looking at an old version, so menus & tabs may not be exact to yours), in the MPEG setting window, the Video tab is for setting how the video is output. For anamorphic video (which you want to be automatically detected and resized either in a stand-alone or software DVD player) these are the correct settings:
"Size" = "720" x "480"
"Aspect ratio" = "16:9 Display"
NOTE: the "16:9 Display" value merely sets an internal flag in the video. It specifies that the video, while ACTUALLY in 4:3 aspect ratio (720x480), should be SHOWN in 16:9 aspect ratio.
It doesn't seem to matter on both DVD players I've tried with my widescreen plasma TV. ... I can't tell any difference whether I selected 4:3 or 16:9
Both your DVD player and your plasma TV have independent resizing functions. Sometimes when changing a size on one device, the other device produces an unexpected effect. Just remember that those device settings are in relation to one another, not necessarily to the video.
To further complicate the matter, the TV and (possibly) the player have up-convertion functions. If your player up-converts the DVD from 480 to 1080, the TV will display it as-is. If the player does not, the TV will up-convert to 1080 to fill it's screen.
Suffice it to say, just confirm that the DVD player is set for "wide" or "auto" and that the TV is set to "full" or "aspect" (whatever the actual language they use). Then it will display correct.
If you cannot get it right, post the various display settings available on both your player and TV, and we'll sort it out.
in DVD-Lab ... one icon has larger letterboxes than the other ...
Is it normal for the 4:3 playback to still look unsquished (too tall)?
Yes, that is normal. The program icon is trying to fairly represent the video picture. If the video has it's aspect ratio flag set to 4:3 (even on an anamorphic video that also has pre-made bars, like your video and the official Star Wars movies), it will show unchanged. If that video has it's aspect ratio flag set to 16:9, the icon will compensate for the anamorphic squeeze, which results in thicker bars but properly ratio'ed picture area.
I thought that anamorphic DVDs were supposed to have correct aspect ratio regardless of playback at 4:3 or 16:9
Arbitrary settings change the "display equation". Video-to-player-to-TV is a process and arbitrary changes along the way will skew the ultimate result.
I know it's a difficult concept to see. That's because each device affects the outcome. If you really want to "get" what's going on, play around with the device settings and see what happens on a commercial widescreen DVD (to eliminate your video creation settings from the equation). It will make sense after a while.