Now, this is one area where I'm really confused. Will a DVD not display in letterboxed format on an HDTV to account for the difference in aspect ratio between the source and the display, just as it does on a conventional TV?
It will, but that's one form of "aspect ratio goofiness." As balamw mentioned, lots of TVs put four black bars around certain signals, whereas some (like mine) have a "zoom" mode that attempts to cut out black borders on the top and bottom of a signal where they're encoded.
For example, TV shows like ER and The West Wing on SD broadcast are transmitted in letterbox for SDTVs--HDTVs add black bars to the sides (to adjust for the 4:3) SDTV picture, and a few of them have a mode which tries to identify black bars encoded in the picture and eliminate them (usually by just cutting off a preset percentage of the top and bottom of the picture). So with ER, the picture is zoomed until the top and bottom black bars are off the screen as much as possible and the side black bars are reduced to narrow strips. Any weather scrolls that come across the screen, however, are then cut off, as are parts of network watermarks, etc.
Also, what you'll find in some cases is that 2.35:1 DVDs are horizontally squished a tiny bit on some sets such that the actual measure of the picture is, say, 2.25:1--just a small change. Some (usually off-brand) TVs will do this in order to make the picture slightly bigger, which isn't enough to be obvious, but is enough for your brain to take notice at least subconsciously. This hopefully is more rare these days (not that it was ever commonplace) now that people pay attention to aspect ratio more.
In part I misunderstood your statement--I thought the black bar problem was something you hoped to eliminate. HDTVs are usually 16:10--so almost every souce will have black bars (even some cable 'HD' programming). But for some of them, using a stretch mode might be okay when it's really close to 16:10, and for others, your TV might have a zoom mode to help. I'm okay with black bars, but lots of other people hate them, so I was trying to cover both sides.