1. Not a fan of letterboxing, but prefer it to distorted aspect ratio
2. Plugins - I think Fomar has one in the resource section for this.
(With a wide screen format, you may want to look into alternate main menu layouts too)
3. If you did, you'd have distorted aspect ratio (rectangular pixels, circles become elipses, etc). It looks bad IMHO. However a plugin could do this by changing the scaling mode in full screen.