I believe that there are posts out there which state that it is possible to turn the Native mode via RGB back on but it requires some sort of hack through the serial port. I believe the more common option (for people not wanting to deal with an HTPC) is to use the Panasonic DVD-RP91 DVD player (about $420 online) which will do the image resizing for you. A new DVD player (the Toshiba 3750 - less than $200) might also do this, but I'm not 100% sure. For me, I bought an RP56 and am planning on moving the projector back and forth (since it won't be ceiling mounted) but part of me is thinking of taking it back to Sears and just going for the RP91 (or see below). FWIW, one issue with the Toshiba 3750 that I've read about is that with some discs the subtitles will turn on by themselves (a problem my older Sony DVD player has).
Finally, as others have said, you can also do this via an external processor. I believe the DVDO iScan Plus V2 will do this as well (can be had on ebay for under $400, I believe). The advantage of this option is that you could use it to line-double non-DVD programming as well (DirecTV, cable, etc.). For DVDs though, word is that a good progressive player will outperform it, though I wonder just how noticeable it would be.
If I had the money to burn, I'd love to get all of these things to do some head-to-head comparisons. I'm still mulling over my options since I plan on going with a 16:9 screen as well.
Scott