Call me stupid but I don't understand what you mean. Are you talking about stretching a 4:3 video to 16:9? Or are you saying the resolution should scale up or down or something?
As for my DVDs and video podcasts, I can convert all of them to the correct format using Handbrake. If you encode them as an MP4 with h.264 encoding, and stay around 1200kbps they look and sound incredible. Just take those videos, convert them, and put them on your card. They'll work great.
Oh from an earlier post you say "Droid has minimal video drivers, based on lower res non-native widescreen movies have borders around them and is very picky on what MP4's will play (virtually no scaling). This means decoding movies to native res, which takes up a lot of space on the 16gb card" The reason you want them at a higher res is because they look better. This is not a low res screen like other Android phones. I'm converting mine to close to native res. and they look awesome. Even if it could upscale videos, why would I? I want the higher native res. Like having blueray vs an upscaled DVD.
As to the card.. I never take mine out of any of my phones. There are only a couple of tv shows/videos that I like to keep on my phone permanently. All my others are dynamic. So no reason to swap out cards. Also the 32gb micro sdhc cards are out, and the Droid can use them.
