It's a given that Full is for anamorphically enhanced transfers (enhanced for 16x9 televisions)
However, the remaining TW modes are purely an objective decision, and you'll hear different solutions from everyone.
For example, I would ONLY use TW2 for 2.35:1 non-anamorphic transfers. This reduce the size of the letter boxes at the top and bottom of the screen since TW2 stretches only vertically. However, you also lose resolution because now there's a larger gap between scan lines. In fact, I never use TW2 on my TW56x81 anymore because I've gotten it so tightly focused via HTLV maneuver and manual focusing, that the scan lines are highly visible and too distracting in TW2. Also, if you use TW2 to watch a 1.67:1 or 1.85:1 non-anamorphic film, you're going to cut off a good portion of the top and bottom of the screen.
Personally, I prefer to use TW1 for non-anamorphic films, particularly 1.67:1 and 1.85:1. The stretch is not all that visible, if the TW1 geometry is correct. I don't really notice much stretching at all through my DVD player.
You really should try them both and see which one works best. The only hard and fast rules are: Full is ALWAYS for anamorphic transfers. And 1080i will ALWAYS be brought automatically when the set senses 1080i input. (you can't manually select it, it's all automatic). Aside from that, which TW mode you use is completely up to you.
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