If you had a 4:3 HD display, the image would be scaled to the appropriate height relative to the width of the screen to keep the correct aspect ratio, similarly to how it is done in 4:3 standard definition. Unlike dvd, which actually encodes in a 3:2 ratio and is then flagged for decoding as 16:9 or 4:3, Bluray is already natively 16:9, so there is no need to squash the image and then re-stretch upon playback: it is already in the correct ratio, therefore, non-anamorphic. Films with an aspect ratio wider than 16:9 have black bars encoded into the top and bottom, the same way non-anamorphic dvd's do; the difference is that the vastly greater resolution of HD allows this to be done while still maintaining a high quality image. An anamorphic system could have been implemented into the HD specs, rather than decreasing the vertical resolution of wider films, but overall it's really a non-issue. Some people with projector setups like to use "constant image height", widening their screens for wide films the way it is done in movie theatres. I think a combination of additional video scaling and special projector lenses has to be used to achieve this effect. It's probably pretty cool if you can get such a thing working, though most people aren't inclined to bother with something like that.

Wow, this thread has really taken off. We neglected OT fans sure do jump at the prospect of any improvements to the image quality we can get! lol