
MPEG Streamclip or other video encoders (like DivX) can correct errant aspect ratio (frame dimensions) in your video. We'll tackle two common problems and their solutions.
PLEASE NOTE: For best, most high quality results, save your video out of your editing program in either a DV format or else "uncompressed." (The file size will be very big. That is normal.) Then import into a video encoding app for resizing and encoding. It is not recommended to try to convert an already encoded video (in WMV, DivX, etc. format) unless you literally have no other option.
This video (including the black letterbox bars) should be in the 16:9 wider screen aspect ratio, but it was saved in some other frame size (closer to fullscreen). You can see that the Phantom's face is a bit too long and skinny.
I opened this video up in MPEG Streamclip, and it told me that the "unscaled" (unchanged or original) frame size of this video was 720x480. (Original frame size is circled in the above screenshot.) Above the "unscaled" frame size is a the frame size for 16:9 (in parenthesis with pink arrow pointing to it). The frame size for 16:9 is 854x480, and that's what this video is supposed to be (letterbox bars included). The original video had a frame size that was 134 pixels off. No wonder the Phantom looked a bit squished.
All that was required was to tick the box next to the frame size that says "16:9," select the other video settings of your choice (don't choose uncompressed audio, however!), and then save the video. MPEG Streamclip will squash it back into shape! Sure, it'll still have the black letterbox bars, but the Phantom won't be so long-faced anymore!

You can see in MPEG Streamclip's "Exporter Preview" that the video is no longer squished.

There's no way anyone thinks this looks good.
I ask you. I ask you—how? How? How?!? How can an accomplished, intelligent, insightful and observant person make a video which looks like this and not know how dreadful it is? His face looks as narrow as a string bean.
I have seen countless videos with this level of distortion—it's quite disheartening. But it's not hard to fix with the proper software.

MUCH better!
I used the $20 (about £11) DivX encoder to fix this problem, but there are other encoders which will do the job, as long as they allow you to put in custom frame dimensions. (Quicktime Pro is another such program.) In DivX's custom window, I ticked the "Custom" box (under Aspect ratio resize) and filled in the numbers 720x306—the proper frame dimensions for a widescreen anamorphic video such as this. I clicked on the "Preview Video ..." button, and up popped a preview of what my video would look like. Perfect! Ready to encode!