Here are some FCE4 output options that create widescreen 16:9 (I used footage shot on my Canon HDV20 set at widescreen Cinema):
Easy Setup: HD, All Rates, HDV AIC 1080 x 1920i50 (or i60 for USA)
Export to QuickTime Use Conversion:
1) AIC HDV, 1080p, 24 frames, Compressor Native, 1440 x 1080 HD 16:9. Size: UNcheck Preserve Aspect Ratio, Check Deinterlaced.
2) None, 24 frames, Millions of Colours +, Best. HD 1920 x 1080 16:9, Size: UNcheck Preserve Aspect Ratio, Check Deinterlaced.
3) AIC, 24 frames, HDV 1080p, HD 1920 x 1080 16:9, UNcheck Preserve Aspect Ratio, check Deinterlace.
Note: When checking Preserve Aspect Ratio with Letterbox and Crop the movie was presented as 4:3 with black vertical borders on the left and right side of the frame and the subject was squashed/squeezed.
Burned using both iDVD and Toast using 16:9 settings. The movies came out widescreen, not as standard 4:3 and not distorted.
Hope this helps somebody!