OK ... I shall trys to explains agains.
TV stations are either 4x3 or 16x9. Only a very VERY few of them actually switch back and forth.
Obviously you've seen, on your analog stations, what happens when a 4x3 station shows a 16x9 source. Letterbox, right?
Well, the stations that are being transmitted with a 16x9 picture do the same thing with 4x3 material, only now the black bars are on the sides instead of top and bottom. We call that "pillarboxed."
OK ... now let's say your station is doing this. The converter box has no way of knowing this is happening. As far as it's concerned, the black bars on the sides are part of the widescreen picture. So what does it do to widescreen pictures? It letterboxes!
Thus you have bars on the sides, which were put there by the station, and bars top and bottom, which were put there by the converter box. Voila - a fully framed picture, a/k/a postage stamp.
Yes, it is a station/program issue, and yes, the Digital Stream shows the exact same thing. The OP is mistaken.
The solution is to tell the box that it's OK to chop off the sides, which you do by pushing the "zoom" button.
None of the image is getting "cropped". All CRT TVs have a bit of overscan, meaning that about 5% of the picture is SUPPOSED to be off the sides of the screen. That's part of the NTSC standard, and it's been happening ever since you got the TV.
Now, there is a slight possibility that you have some dang fool local station with a CEO who hates black bars in all forms and has demanded that the engineering department reduce them as much as possible and he doesn't care how they do it. Such stations usually end up broadcasting their 4x3 programming stretched a bit to approx. 14x9. There is also a slight possibility that the station has inadvertently set their upscaler to square pixels instead of broadcast standard, which will produce a 3x2 picture (also stretched a bit). In either of these cases, hitting your zoom button WILL shave off a bit on the side edges. This is not the box's fault, though. It's your nincompoop local station. Start making some irate phone calls.
There IS one issue with the Zenith/Insignia boxes, and that is that they DO cover up just a little bitty teeny weeny bit of the edges when they letterbox a 16x9 picture, which is something that most other boxes don't do, including, I assume, the Digital Stream. This is a separate issue, and probably a deliberate attempt by LG to preserve the overscanning that would be happening if you had a real 16x9 TV. Some folks consider this an unpardonable sin. You will have to make that judgement yourself.
As for the commercials ... The thing about commercials is that most of the paperwork and distribution are done by people who don't know the first dang thing about video. So yeah, a lot of them end up messed up. Who cares? They're friggin' commercials.