My first suggestion is to strictly adhere to the 10% action safety zone and 20% title safe zone. It is there for a purpose and you just experienced it. Any given TV may or may not display the outer 10% of the picture so don’t plan on putting anything important there.
As for the player issue, there is no encoding trick here. This is specific to how people have their DVD players set up. It sounds like your folks have their set up in Pan and Scan mode which crops 16:9 video to 4:3. Perhaps it was their choice because they don’t like black bars… perhaps it was the default for their player. There is nothing anyone who creates DVDs (including Hollywood) can do about that. You can certainly set up their DVD player to display the 16:9 correctly but it is a function of the player, not how you create the DVD.
If they want their player to display 16:9 with black bars you have to change the player settings for them.
~jr
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