Well I just tried to read through this thread full of tech specs and intellectual babling. It appears to me that you guys just aren't on the same page as far as where in the presentation process you're referring. ApolloOne seems to be referring to how anamorphic frames are created for pressing to DVD, whereas MeBeJedi is talking about anamorphic frames being manipulated by a DVD player.

Looking at your two example images above, you can clearly see the difference between how anamorphic dvd frames look compared to letterbox frames. Yes, anamorphic frames have more vertical resolution. It's because the image is meant to be stretched horizontally to the correct aspect ratio on widescreen displays, or shrunk vertically to fit a 4:3 television. Keep in mind that the desired output resolution (square pixels) of an anamorphic video is 864x480, not 720x480. On that note, I'm suprised no one has mentioned pixel sizes yet.