First of all, there is no "correct" resolution. The projector recognizes different resolutions and projects the original image in its original format if it is less than 1280x800. Here are two it recognizes (this is from the manual, that you could have downloaded from the Optoma site):
"16:9: This format is for 16×9 input sources, like HDTV and DVD enhanced for Wide screen TV.
16:10: This format is for 16×10 input sources, like widescreen laptops."
So, most laptops have this resolution, so I guess 16:10 is "correct" for them.
In any case, the projector does not distort the 16:9 original image, just does not use the extra pixels.
Works great for 720p 3D.