Yeah, hah, I ran into the preview issue when I first started with V4, and someone was kind enough to pass on this advice to me:

Rt click on your preview window and select "Simulate Device Aspect Ratio"

If your project is set to Widscreen it should desqueeze for you.

Not positive but to answer your other question try setting your project to .9091 NTSC DV. Throw your squeezed DV on the timeline, right click it then go to "Properties" and make sure "Maintain Aspect Ratio" is on then hit the "Media" tab and select Widescreen 1.2121 for its pixel aspect ratio, although it might be more acurate to type in 1.1850--it all boils down to, does it look right.

I did the rightclick on the preview window to simulate device aspect ratio. It made the preview windoe the right aspect ratio, but I got black bars on the sides of the frame and the image is still squeezed.

I DID go to the event properties of a few clips and un-checked the "Maintain aspect ratio" this unsqueezed the preview image. I'm not sure what this will do to the final output, though.

Also just saw that when I play it on an external NTSC monitor thru my deck, it's unsqueezed, but cuts off the sides.

Not a great solution

Having shot in 16x9 the footage should look 'sqeexed', in fact if it didn't look that way on a 4:3 monitor it's wrong.
Now what you are trying to do is an Aspect Ration Conversion. This involves an artistic decision. Your footage contains more information than will fit onto a 4:3 TV or monitor. You have two choices:
1) Letterbox. The only way for european audiences, they'll have a dummy spit if you fiddle with the look and feel of what the director wanted. But this does mean black bars top and bottom. So what your audience will see is a 16:9 frame in a 4:3 window.
2) Crop and Pan. Usually the go in the USA, 'hey I paid for a big TV and you'd better give me a picture that fills my screen' seems to be the issue. This does mean the sides get chopped off Here the audience sees a 4:3 window into a 16:9 frame. But you can have control over this, in Vegas you can keyframe the window so if you have vital action on the very left side of the frame you move the window over. Best solution is when you shoot to have a 4:3 safe area maked out on the viewfinder and don't let anything vital get outside it.

Sorry there's no easy fix, imagine what it's like if you'd shot 35mm at 2.35:1. Well it's not a question of fix, it's just reality, bit like taking a photo of a sculpture.

If you've rendered out the file to an anamorphic AVI you can drop it back on the timeline in a new 4:3 Vegas project in order to output to tape. It should automaticly keep the aspect ratio within the 4:3 window.

I don't know any way to get around the preview of a 16:9 project on a 4:3 monitor. I wish Vegas was monitor aware so it could automaticly add the letterbox to anamorphic video if needed for the preview.

JBJones

You need to change the aspect ratio of each clip to 1.2121. Right click on a clip and go to Media, and then change it from 0.91 to 1.2121. Or you can use the script found here, courtesy of Johnny Roy:
http://mediasoftware.sonypictures.com/forums/ShowMessage.asp?ForumID=4&MessageID=265613
(scroll down to post#8)
Once you change the aspect ratio of all the clips, then you can choose between:
1- having a timeline set to widescreen, in which case you will see a true 16x9 picture, or
2-having a timeline set to regular dv, 4x3, in which case you will see a letterboxed version

In both cases, check the simulate aspect ratio.