This is a problem that was described in a post about 2 years ago, Why does iMovie stretch my images upon importing? which has since been archived without a solution.
Well, I'm having the same problem now that I have finally gotten around to converting some of my old home video on Mini-DV tapes taken with an older JVC digital camera. They were taken in the JVC's Widescreen Mode, which is 16:9 letterboxed in a 4:3 window. iMovie '11 relentlessly stretches these horizontally when they are imported whether I set the iMovie '11 File/Project Properties/Aspect Ratio to 4:3 or 16:9. I am short and wide enough without suffering this additional indignity, so I needed a solution. I didn't find one in this forum or elsewhere, but I did develop a work-around, which I will share. If anyone knows how to fix this problem directly in iMovie '11, I'd appreciate it.
Meanwhile, here's the work-around. You will need the older iMovie HD, still avalialable free from Apple.
In iMovie HD
-Create a new DV-NTSC (not Widescreen) project
-Go to Preferences/Import and uncheck Automatic DV Pillaring and Letterboxing
-Connect the camera and import the video clips
-Save the project (you don't have to move any of the clips to the movie timeline)
In iMovie '11
-Go to File/Import/iMovie HD Project...
-Find the project above and import it.
-Your clips will be in the imported events folder. Select one entire clip. In the viewing window you will see it as a small 16:9 image surrounded by a black border on all 4 sides.
-Select All (Command-A) to select all the clips
-Click on the Crop icon
-Drag and size the green crop outline to exclude the black border and click Done. Now the clips will show properly in the viewing window and also in the project when you drag them there.