DVD encoding - anamorphic, letterbox isues

I have a project with a mixed footage of 720X480 and letterboxed 720X480 but not anamorphic (masked in the camera). What is the best way to make it display letterboxed on a regular tv screen and full screen on a wide screen tv or computer screen with 16:9 aspect ratio. The director wants to letterbox he whole project. We are doing it in Final Cut and DVD Studio Pro.

We where thinking that maybe the best way is to crop to 16:9 then stretch it to 720X480 and then author it as anamorphic on the DVD. Is there any better way to do this? Are there any issues about anamorphic authoring and playback?

Our goal is to be able to play full screen on a wide screen tv or computer without a black frame around it, as it would be the case if we leave it in native 4:3 and mask it to 16:9. If we are doing it native 16:9 wide format what is the best size to use in pixels. I tested a hollywood movie DVD and made a screen grab and the size was 853X405 pixels in the right aspect ratio. Can I just output and author the whole project in this size? Will it automatically letterbox it on a regular 4:3 TV?

Thanks for any advice.

David