I understand your question now (I think, heh), but I don't think
I've got an answer. I hope someone else (Edward?) does.

Back to 16:9. It is a good thing it is the 16:9. If you hook it up
to a 4:3 TV and playback the 16:9 footage does it look squashed?
If not, then you are doing it wrong. Again, you should print to
tape in 16:9, not 4:3 (which will add letterboxing). If you do it
correctly it should look squashed without letterboxes (unless
those appear in your footage, ofcourse).

How a festival is going to display it is a whole other ballgame.
From what source are they going to read it? DV in the XL1S?
DV in another cam? DV on a deck, DVD etc. etc. That depends
on how you need to deliver it. Also depending on what hardware
they are using on the festival. DVD is good in that it takes care
of this for you.

Alright. Thanks. I guess I'll just worry about the aspect ratio on a case by case basis.