You are trying something that not reasonable.
First thing you need to tell us is what is the end deliverable? DVD? BluRay? HD/SD broadcast?
If your main footage is 3:2 (which is Broadcast 4:3) you don’t have anamorphic footage, to go to anamorphic you have to scale the footage up about 33%, not an easy thing to do and keep quality. Then using a HD sequence is even worse. Converting 4:3 to 16:9 without scaling and then cropping top and bottom will just distort the image. Fat people and oblong circles.
[Kyle Cox] “4). QUALITY is of the upmost importance. I don’t want to sacrifice it at all.”
If that is true you need to spend some $, You need hardware conversion to even have a chance at quality. Even then you better have great source footage that is tack on sharp focus and exposure.
Once you decide what your finished product needs to be you need to choice the sequence setting that makes sense. then all the footage needs to be converted to that if you do not want to render all the time.