This thread is not too big yet, kurkodsr, and you raised some points of interest, especially the confusing wide screen flag business. Initially I thought you were talking about the DVD-based letterbox/16:9 flag, but I now realize you meant the flag some TV sets use to auto-unsqueeze 16:9 video (rather than show 4:3 distorted until you manually select 16:9 with the TV remote).
My Pioneer twin of your Sony 780 recorder doesn't seem to capture any widescreen flags: all 16:9 material gets recorded as straight anamorphic 4:3. My Sony TV usually auto-switches between 16:9 and 4:3 with broadcast or cable signals, but not with anamorphic DVD-Rs recorded from those same sources (I always have to manually press the "full" 16:9 option on the remote, or the TV plays the widescreen DVD squeezed into 4:3 with black bands on the sides).
When I patch the 16:9 source thru my Sima CGMS-A filter, or thru my DataVideo TBC1000, nothing changes. They do not take the 16:9 input and convert it to 4:3 LBX. I end up with the same 16:9 anamorphic DVDs I would get without the filters in the chain (they require manually switching the TV to 16:9 so it decodes the signal properly). The DPX7000 is a derivation of the earlier Simas used by jjeff and me, so shouldn't interfere with the basic WS format in any way. Whether it strips the TV WS flag, I don't know, since I've never been able to record such a flag.
I don't have an Xbox, but I assume you're telling us it somehow inserts a flag into the signal that a Sony/Pioneer CAN record and pass on to the DVD, which would let you avoid manually hitting the stretch button on the TV remote. This would be an oddity, and most TBC and "video filters" would likely strip such a flag in the process of removing CGSM-A. They would not change the 16:9 to letterbox, but you would lose the convenience of the TV automatically sensing the 16:9 and changing its format accordingly. You would get what I get: an anamorphic squeeze in 4:3 that the TV must be told is 16:9.
The high cost of the Logic Design filter is due to the designer taking all of these "little things" into consideration and giving the user control over them. The unit allows you to add a WSS flag to tell the TV to auto-stretch (conversely, if the WSS flag is already in the video Logic Design will not remove it). The stripping firmware in the Logic Design is "smart": it removes only the unwanted sections of the VBI, leaving closed captions and WSS untouched. This feature preservation is what you pay for. TBCs and other less expensive filters use a brute force approach, reconstructing the entire VBI and often deleting everything that isn't purely "video" (ferinstance, my Sima is 50/50 with closed captions).
So basically its down to how much of a big deal you think it is to manually hit the 16:9 button on your TV remote to unsqueeze the anamorphic recording. If that doesn't bother you, the DPX7000 or a cheap used TBC should do just fine. World Import is OK to deal with but they aren't the brightest bulbs in the box: they may not understand your email re the DPX7000. You could buy it with a credit card to be sure of getting your money back if it doesn't work as you'd like. If you don't want any potential hassle at all, just pay the extra to buy the Logic Design in the first place (since he's guaranteed it will do what you want).