I am creating DVDs from images shot with my Sony TRV19E Mini DV camera.
I can shoot with the camera at default aspect ratio (4:3 I'm guessing) or set it to 16:9. When set to 16:9 the image in the camera LCD display is "mailbox" shape (black bands top and bottom).

Does this mean I have lost some image area when using 16:9 setting?

When I transfer the images on tape to my PC via Firewire, Windows Movie Maker asks if I want to capture in 4:3 or 16:9.

If I do not choose to capture to the PC in the same ratio as was selected in the camera when the original tape was shot, will image distortion occur in DVDs I create?

If I play a 4:3 DVD I create in a 16:9 TV, is the image stretched (giving everyone fat heads)?

If I play a 16:9 DVD I create in a 4:3 TV, is the image compressed (giving everyone skinny heads)?

Will all TVs in the future be 16:9?
Which ratio should I be using to shoot and PC capture images?
I am in Australia (PAL TV system)
Any advice appreciated.