No, it converts the image to a 4x3 level of resolution. It wont be stretched, nothing will be lost. Everytime you buy a commercial dvd that is widescreen and anamorphically enhanced, (examples: Matrix, Gladiator, Episode I , II) and watch it on a regular 4x3 tc, a conversion occurs. When you set your dvd player to 4x3 mode, you are telling the dvd player to convert the widescreen image to properly display. No cropping ar streching occurs. The player essentially removes lines, or resolution. But the bottom line is, the resolution is dumbed down. On most 4x3 tvs, the difference is barely noticable. When you watche a non-anamorphic dvd on a 4x3 tv, no conversion occurs, so there is no chance for problems in the image to occur. anamorphic is still the preffered format for all widescreen dvds, because it can be properly displayed on both 4x3 and 16x9 tvs.

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http://www.thedigitalbits.com/articles/anamorphic/welcome.html