How are viewing the encoded file?
I have Squeeze 5 and did an encode from DVCProHD to Flash 8 FLV 480×270 and tested in both Eltima’s free player and the new Adobe Media Player. Media Player makes it look as if it might be letterboxed since it is surrounded by black. Eltima’s flash player showed white background with a 16×9 image.
I suspect your encode is 16:9 but there might be some confusion in how the player is showing it.
You’re not getting an “odd” pixel shape are you?
If you have it on line I can take a look there. There may well be some odd programing with your embedded player (swf). I have a hunch the flv itself is fine though.