The "pan and scan has more resolution in the square box than the letterbox has in that same square box" defense is sometimes true. I said this of the DVDs- that the P&S versions had ~3 times the number of pixels for the space... except someone who knew told me that the P&S version was a blow-up of the Widescreen, so that extra resolution was all garbage anyways.
In the case of the DVDs, this is partially right, I believe both were sourced from the same HD master. But back in the old days, P&S transfers and widescreen transfers were done separately, at native NTSC or PAL resolution.
And BTW, I'm not defending P&S, I hate it as much as you do. It's just an unfortunate truth that until the late 90s, the image detail of widescreen transfers was restricted by the fixed resolution.
That said, I repeat that I loathe P&S with every fiber of my being, and I still prefer to watch widescreen, no matter how low the resolution. I just think the P&S laserdiscs (not VHS tapes) should be digitized for posterity.