I agree with Craig. If you’re shooting 4:3 SD just accept the pillar boxing. There are options for embedding a 4:3 player, that could potentially help you out, if your doing that sort of thing. But why not throw it into 16:9 mode? I looked up some PD 170 16:9 videos on youtube… I think its worth it.
Embedded video of PD 170 in 16:9 mode, in a “normal” 16:9 Youtube player-
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and a 4:3 video embedded in a 4:3 player (this video has pillar boxes when viewed on YouTube)-
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There is nothing “wrong” with a 4:3 image, playing in a 16:9 window, having the black bars on the sides. That is how its supposed to be unless you want to crop or stretch it. If there are black bars at the top and bottom as well as the sides, you have a problem and we can fix it.
I also agree with Craig on getting an HD camera. I had a Vixia G10 (in the $1000 range) for a short time. I was pretty impressed with the quality of the video, even in fairly low light theater situations. Of course it wasn’t as good as my Sony NX5s, but better than I expected it to be. I’m sure a model in the $300 dollar range would still give you a respectable picture, especially with favorable lighting conditions and a skilled camera operator.
As for AVCHD, IME with my NX5s, there is almost no visual difference between the AVCHD internal recording vs feeding the SDI to my AJA Ki Pro and recording Prores 422. Of course there is a difference when it comes to green screen or color grading, but I haven’t really tested for those differences.