I understood what you were saying, Shaw. I was just rambling on and on, like I do, in the hope that saying the same thing 5 different ways would help Eddie make sense of all of this techno-jarble.
Back to my point about oversampling, vs. stretching from 75% of a 4:3 frame. I was just reviewing the specs on the camcorder, and it claims to sport 3, 470,000 pixel sensors. In PAL format, with 525 lines of resolution, you'd need something like 380,000 pixels to make up the 4:3 image. If you then used 3/4 of the sensor for 16:9, you'd be using 352K pixels (theoretically, of course), to construct an image of 378K pixels. That really isn't much of a stretch. At least not as much as taking the 378K pixel image and reducing it to 75% in the vertical dimension and stretching, which would be starting with about 283,500 pixels.
So ... it is theoretically possible to get better 16:9 from the camera than you'd get by converting in post; even if you had excellent interpolation software. You will still lose some resolution, because only part of the sensor can be used. The difference in chroma samples would be even more significant, but I don't want Eddie's head to explode (miniDV PAL samples chroma on every other line). Of course, these numbers are all based on theoretical maximums and the final arbiter should be real world testing and subjective analysis.
In laymen's terms: Try it, and see if you like it.