In Vegas, I just set the frame to 16X9 and zoom in on the picture. Nice and easy.
"Regarding the "softening" misconception, see this thread."
It's not a misconception. When converting a letterbox transfer straight to anamorphic, it does make the picture softer. It can't be helped, since you are simply taking the existing image and making it larger (unless you use some super-duper scaler in the video chain, and I don't know anyone who has done that). However, an anamorphic transfer from the film master creates a higher resolution than a straight letterbox transfer.
Of course, if you watch the anamorphic DVD on a 4X3 television, you lose the extra resolution and risk introducing video artifacts as well.