A coworker of mine and I are having creative differences. Does anyone know if there is an industry standard when using standard def video in an HD project. Should it be blown up to fit the screen or not?
There is no standard. Just by turning on your HDTV, you can surmise this. Many prefer pillarbox, as that preserves the original aspect of the source. This is true for most SD TV shows that are remastered for HD Blu-ray. But many SD TV shows are remastered for HDTV using Edge Crop, which is a further blowup, cutting off top and bottom of the original frame. This is a preference of some, due to the idea that some people who watch HDTV think that every pixel must be filled, or it's not HD. Different camps for different reasons. I prefer preserving the original aspect, unless care had been taken during shooting to frame for eventual HD. Then nothing is potentially missing in an edge-crop conversion.
There is no one standard. This is partly due to the fact that there are both technical and creative aspects involved. From a technical point, many (most?) broadcasters do not like having black on the sides of 4x3 footage inside a 16x9 frame. So, if you have 16x9 SD footage and you blow it up to fill the 16x9 HD frame, you've crossed one hurdle. That also depends on how good a blowup you do, and whether there are noise or interlacing issues.
if you're wondering about 4x3 into a 16x9 frame, many broadcasters won't accept the black on the side, as this can been interpreted as a Blanking Error. So then you either blowup the 4x3 SD footage even further, to fill the sides, losing some of the height or, you take the creative option and fill in the black with a background. Some people take the original content and blow it up and blur it. Others will create a graphic background to suit the graphic style of the program.
Technical standards must be adhered to; creative solutions are up to you.