Well ... actually ... it is just stretching things to fill the screen and/or chopping bits off with black bars.
IMO it has a very zoomed feeling whatever choice is made ... :(
The resolution is selected independently to the ratio.
There are 3 settings for the ratio ... 4:3 ... 4:3 Bars ... and 16:9
Demo here .... http://www.3dgamers.com/games/kingkong/
Here are some screenshots to show what is happening with the various options...
Click to enlarge ... even when enlarged they are not full size.
1600x1200 ... with the 4x3 option ...
1600x1200 ...with the 4x3 Bars option ...
1600x1200 ... with the 16x9 option ...
1920x1200 ... with the 4x3 option ...
just stretched ...
1920x1200 ...with the 4x3 Bars option ...
stretched with bars ...
1920x1200 ... with the 16x9 option ...
stretched with bars and some of the top and bottom are chopped off ...