What exactly is the auto letterbox and pillarbox option?

Can't find any reference to that preference in the help file. Can someone define exactly what that option does?
I'm guessing its affecting a project I'm working on. I just imported about 40 minutes of footage from a mini-DV camcorder. The person who shot it must have turned on one of those fake widescreen effects in the camcorder because the footage has black bars on top and bottom. Anyway, after the tape was finished importing iMovie put up a status box stating: "Letterboxing - Please wait this may take a while." Well its been about 2 hours now and its still not finished. I'm not even sure what the heck its doing.
Thanks,
Chris

What issue?"
That is what I am asking...Like I said, I am able to open CS5 on my new retina mbp and edit image files with no issue..the only thing that I notice that seems off is the text of the UI seems "fuzzy"....
So, what I am asking is what exactly is the problem supposed to be that I should be seeing?

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