GL2 16x9 guides
 

When you turn on the 16x9 guides, I'm guessing they show up when you import the video to your NLE, then you just crop the top and bottom to get the 16x9 "look".
If so, why does the camera have the 16x9 mode? Is this just for people who want the 16x9 look, but don't have a NLE to crop? My understanding is that in 16x9 mode, the imgage will look "stretched". This is correct?

White 16 x 9 guide lines
 

No, the white “guides” are only a reference and are not copied to the tape. Allows you to see what 16 x 9 would look like. There is a lot more information here about it you might want to do a search.

enjoy

The lines don't show up when you import the material into your NLE - they're merely there as a guide when shooting. You'll have to crop afterwards.
The 16:9 option is there since it offers proper Full Height Anamorphic images to people who can view them on equipment (TV screens etc) designed to unsqueeze the images and produce the wideangle view.
The image as it leaves the camera is designed to be squashed laterally so that it can be unsqueezed later. This is the proper way of achieving and distributing widescreen video.

Robin