DV-Widescreen

You should shoot and edit in whatever format your camcorder natively supports. Delay any conversions until the very end of the process, like when exporting the final movie.

In the DV world, all footage uses a resolution of 720x480 (NTSC) or 720x586 (PAL). Widescreen vs. standard aspect ratio is accomplished by using rectangular pixels. Or in other words, widescreen footage does not have a higher resolution. For widescreen, the pixels are wider than tall, and for 4:3 they are taller than wide. So when you take a DV clip in one aspect ratio and add black bars to the sides to change the aspect ratio, you have to re-render all the pixels (which introduces a loss of sharpness), and loose 25% of your original pixels in the process (replaced by the black bars).

Some older camcorders where 4:3 natively, but had a simulated 16:9 mode. Recording in 16:9 mode with one of those is not a good idea, as the data from the 4:3 sensor where post-processed as above, giving you effectively a lower resolution video stream.

If I shoot a movie on my Sony camcorder in16:9 widescreen should it be imported as DV_PAL or DV PAL-Widescreen

DV Widescreen is 16:9
DV is 4:3

(It would have been helpful if Apple had indicated that!)

Also, when is it advisable to use the DV letterboxing feature

Never! In fact, if you are importing widescreen video you should UNcheck that box.

What it does is reduce/crop 4:3 video to the shape of 16:9 by putting black band at the top and bottom.

Strictly for wallies! 🙂

Yes you should!

If you know you footage is in widescreen, then before starting import, set the new project to DV Widescreen in order to maintain the correct aspect. Ditto with the iDVD project.

But do NOT tick the 'automatic letterboxing' option.

I am not sure if you can change the aspect of the project after you have started importing, so you may have to import it again as a new project.

Good to hear, thanks for posting back!