A solution to this problem when playing movies is to use the popular VLC media player to create an anamorphic picture (pre-compressed horizontally but not vertically), similar to the technique used by widescreen DVD players. Setting the TV to widescreen display then shows the movie at full width, in correct proportion, and without losing any vertical resolution. To do this I've found the simplest approach (using VLC 0.8.4) is to set the VLC 'Monitor pixel aspect ratio' to 4:3 before opening the movie. This setting can be found in the Video preferences when the Advanced preferences option is checked. With this setting, I've found that VLC then compresses the display horizontally exactly the right amount so that displaying widescreen on the TV restores the correct proportion. With a good quality source, the resulting picture quality is then almost as good as playing on a DVD player.
[kirkmc adds: I haven't tested this, not having a PowerBook, but I'm surprised that this is a problem. I have a 16:9 TV (and have had it for more than five years), and it's the TV that changes the screen size, not the input device. Also, you need to check the Displays preferences and set the resolution for the TV once it's connected.]

