How do I change the aspect ratio of source video in the event library?

However, when I delete rejected frames from any particular video clip in the event library the video clip is automatically pillarboxed (i.e. switched from widescreen to 4:3 format). This squashes the video horizontally, stretches it vertically and leaves vertical black bars to the left and right of the video during playback. This automatic change in aspect ratio is occurring to the source video in the event library.
This happens when you use "destructive" editing work flows. By splitting and then deleting the rejected content, you are forcing iMovie '08 to physically copy the kept video segments to new physical files in the Event folder. The new files do not have their anamorphic flag set for widescreen playback. iMovie '08, looks for this flag and when it does not find it automatically assumes the content has a 4:3 aspect ratio and treats it as such.

I’d be grateful for any help / advice on how I can convert the edited clips back to widescreen aspect ratio, so they display in the event library as they did when first imported into iMovie.
The only way to reset the anamorphic flag is to re-compress the now modified files with the 16:9 setting activated. Both QT Pro ($30) and MPEG Streamclip (free) can do this.

I don’t really want to clog up my hard drive with unwanted video and it’s easier to edit it from within iMovie.
Have you considered manually importing only portions of the clips you actually plan to use? Or, if you must import the entire clip, have you considered trimming externally in an application like MPEG Streamclip which will allow you to set frame level in/out points and then perform a "Save As..." operation that stores the select range of frames to an MOV file container retaining the proper flag?

Is there anything I can do from within iMovie to activate the 16:9 setting for these as yet unedited clips, so the same pillarboxing doesn’t happen?
Not sure what you mean by "unedited" here. If the files have been destructively split, the flag is gone and there is nothing you can do about it but re-compress. If you mean they are imported but as of yet whole and still contain their flags, then you have two options. The first is to edit non-destrctively within iMovie '08 and the second would be to do the trimming externally.
This second option is really fairly simple. Just close iMovie '08. Open MPEG Streamclip and load a clip you want to trim. Set your in and pout points, select the "Save As..." option, and store the files in the original Events folder with a new name. I would also recommend you perform these trims in their original time sequence so the "creation" date time groups (Finder attributes) are in time order also. When done with the loaded clip either delete it from the "Event" folder or move it to an archival location. When done with the last clip, close MPEG Streamclip, delete the Cache and Thumbnail folders from the Event folder, open iMovie '08 again, and go get a cup of coffee or tea while the files are re-thumbnailing. DO NOT DO THIS TO ANY EVENT WHICH CONTAINS FILES ALREADY USED IN ANY PROJECT. (I.e., this must be done before you start the actual project editing process.)

It seems odd to me that iMovie is doing this.
I suspect that as the application was originally written as an NLE, non-destructive, "by reference" application, the writers/updaters "overlooked" this facet when adding a "destructive" routine and did not provide for checks of this flag nor provide for copying it re-written segments.

I don't suppose you know if this issue has been resolved in iMovie 09 or is the 16:9 flag still lost as soon as you do any destructive editing?
Not to my knowledge. If I need to do a destructive trim, I simply open the iMovie "Event" file(s) in MPEG Streamclip, set in/out points for each segment I wish to keep, and use MPEG Streamclips "Save As..." option to save each segment. This work flow preserves the aspect flag and, if you don't change the file name, should save the original date/time stamp if the source file was imported directly from a supported camcorder, as well as, avoids the need to re-compress the data. I then just delete the original source file(s) from the event folder, along with the thumbnail and cache folders, re-open iMovie, and allow it to re-thumbnail the all files in the folder. You would not, of course, do this to an event folder already in use by a project. This work flow requires more preliminary planning but usually saves a lot of work in the long run.