Sounds like it was shoot Letterboxed and not 16:9, though squeezed and barred is odd, do you mean stretched and barred? NOt much you can do about that, was not a capture setting.
This is a major zoom to go up to HD, I would do it in Compressor and use Frame Control set to Best (optical flow) and do test with the
Start with the preset Other Workflows>High Definition>DVCPRO HD 720p60
Frame Control – On
Resize Filter: Best
Outout Fields: Progressive
The rest you have to test to see what gives you the best image
*** Geometry Tab***
Source Inset (Cropping)
Crop to: 16×9 1.78:1
Make sure Dimensions are 960×720 Custom (16:9)
Pixel AspectL DVCPRO HD…
Good luck, this is probably not going to look pretty.