I have found the problem, which lies in viewing the exported file from camera roll.
If you play the video directly from iMovie, it is displayed letterboxed instead of cropped. That's what I'd want.
If however you export the movie to camera roll, and play it from there, it is cropped. Not good.
In camera roll there is no option (that I can see) to switch between viewing videos as cropped or letterboxed. In the videos app there is this option. Next time I will import the video into the videos app, and view it from there.