Your computer monitor uses square pixels, Standard Def TV does not, it uses pixels that are in ratios that are either .9 or 1.21 Wide to Height. When you create a 720 comp, you have created 720 pixels and for clarity it’s easier to work looking at the pixels displayed in a square pixel composition. When you toggle that button it stretches everything 1.21 to show you what it will look on a wide screen display and that stretches things and makes it look bad on your monitor, but it will be fine on a tv set.
If you want to see the effect of this choose the circle tool, hold down shift and make circle. When you press the button and go to square pixels, your circle is squished, press the button to compensate and see what it will look like on a Wide Screen it will become perfect again.
Again, I looked at your the project you uploaded, if you need to deliver a Wide screen 720×480 video, you need to work in a 720×480 comp 1.21 pixels…You can use the NTSC D1 Widescreen preset.
Check out this article on Pixel Aspect Ratio, it will explain it a lot better than I can.
Johnny Cuevas, Editor
Thinkck.com
“I have not failed 700 times. I have succeeded in proving that those 700 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work.”
—THOMAS EDISON on inventing the light bulb.