None of those questions need to be answered; it's clearly from DVD to DVD, and all it needs is a crop and resize and you'll be in the same situation as any anamorphic DVD.
This will work with captured yuy2 avi's from vhs or laserdisc, or extracted vobs from dvds. The resulting quality will be the same as most zoom functions on tv's or dvd players. You can get slightly better quality by using a better resizer like qtgmc.
One practical note though, it isn't always the case that a title is in one vobset, for example episodes can be merged into one set of files. Use vob2mpg for such cases.
I didn't think through if interlaced resizing properly works, but I hope avisynth does it right. There's no check that the source is actually letterboxed, but you wouldn't be encoding it if it wasn't. Also there's easier to ways to do what I'm doing, for example just use the crop/resize settings in any editor or encoder program, but with my approach, I leave open the possibility to use qtgmc as you asked for the best quality.
Code:
#script to convert letterboxed video to anamorphic
#requirements:
#Avisynth 2.60 http://sourceforge.net/projects/avisynth2/
#FFMS2 https://github.com/FFMS/ffms2/releases
#define working directory for convenience
dir="C:\Users\me\Videos\Emergency\"
#open the file with your desired source filter. Using ffms2 means you don't need directshow filters installed
openvid(dir+"VTS_01_1.VOB")+openvid(dir+"VTS_01_2.VOB")
#read the dimensions of the opened video
w=width()
h=Height()
#crop it to 16:9 letterbox
croph=h*(16-9)/16#what's leftover from a 9/16 height
#remember the original chroma format (only yuy2 and yv12 supported)
yuy2=isyuy2()
yv12=isyv12()
#convert to a full chroma format so there's no mod2 restrictions on height
converttoyv24()
#crop to letterbox
crop(0,croph/2,0,-croph/2)
#make anamorphic with your preferred resizer here
BilinearResize(w,h)
#return to original colourspace
yuy2?converttoyuy2():nop
yv12?converttoyv12():nop
#ready to encode
#function to open a video, for convience of merging a vob set
function openvid(string fn){
a=FFAudioSource(fn)
v=FFVideoSource(fn)
audiodub(v,a)
}
As for the simplest way to do this, just crop 105 pixels off the top and bottom of the video, then resize to 480 height, in whatever program you use, such as
virtualdub with the mpeg source plugin.