tangeray,
For anamorphic titles, full-mode on a widescreen is what you want. On a ~1.78:1 ratio anamorphic movie, this will fill your entire 16:9 widescreen and the aspect ratio is correct - nobody is too skinny or fat. On a ~1.85:1 anamorphic movie, you may see very very small black bars on the top and bottom (normal), and the aspect ratio is again correct. Many movies are 2.35:1 aspect ratio. These movies show HUGE black bars when displayed on a standard 4:3 TV, and small black bars (top/bottom) when shown on a 16:9 widescreen. Once again, the aspect ratio will be correct - provided you've told your DVD player what type of TV you have.
Here's where the problem arises. If you choose to play a NON-anamorphic DVD movie (and there are actually a LOT of these - even major releases, like Bug's Life in the US!), then the image information in the pixel area (720 wide by 480 tall) has HUGE black bars encoded into the actual image so that the aspect ratio will be exactly correct for display on standard 4:3 TV's. If your widescreen TV locks into full-mode when receiving a progressive signal, then these 720x480 pixels are made to fit in your full 16:9 area. This results in people that appear too fat, since they've been stretched sideways to fill your widescreen. Again, if your TV locks into this mode, you're toast and can't do anything about it unless you change to interlaced mode.
If your TV does NOT lock into full-mode, you can use it's scaling features to stretch it VERTICALLY ONLY by the amount needed to bring the aspect ratio back to correct. The result is smaller top/bottom black bars, and people that look right. Of course, the image you see now (excluding the black bars) is made up of less actual original lines than an anamorphic title would have been.
The actual names of your particular TV's scaling modes are undoubtedly different than other manufacturers. My Mitsubishi 55809 (?) does NOT lock into full-mode, so I use one of my 5 available scaling modes that scales vertically (only) to make non-anamorphic DVD movies appear correct. I recently got a Panasonic RP91, and it's internal scaling of non-anamorphic movies is noticeably better than my TV's scaling. I have about 10 non-anamorphic titles, and they are much more enjoyable to watch now.
Hope this info helps, and good luck.
Brian