Ok basically you're right, there are still black bars. The idea is for 16:9 you zoom the picture smaller so the height is filled and you use all of a 16:9 screen. For widescreen (2.35:1) you zoom out bigger, and unmask the sides of the screen and, while the height is the same (constant), the picture is wider. The black bars on top and bottom are there, off screen, but it's masked.
The idea is that 16:9 movies and TV, the picture is effectively smaller, but for cinemascope movies, you have a wider, grander picture. You need I think around a 2.0x zoom to do this, although 1.8 is also in my mind, so I'm not sure (help?) but certainly 1.2 won't get it done.