I don't believe there is such an option. I've never seen it anyway. I agree it would be nice as an option though. The current behavior is to have the image fit within the frame. I'd love to have an option that would switch the behavior to having the frame fit within the image. Of course, then you'd probably have people picking that option and then complaining that parts of the images are being cut off.

In answer to your PS ... it depends. *shrug* That's the best i can tell you. It depends on whether the TV hides overscan areas or not, to what degree it hides them, and how wide the black edges are in your video. I can virtually guarantee it will be different on every TV.