Page 107 of the manual will show you the Down-Convert options.
Switches down-conversion output mode.
SIDE CROP: Crops the right and left edges of the images with the 4:3 aspect ratio.
LETTER BOX: Adds black bands at the top and bottom of the images, and the images with the 16:9 aspect ratio are displayed in the 4:3 aspect ratio.
SQUEEZE: Select this option for 16:9 aspect ratio images. When viewed on a 4:3 aspect ratio monitor, images are squeezed horizontally.
Your shooting 720p and you want to output 720p? This is not a down convert.
Chris