HD is already widescreen. Do you mean downconvert to SD widescreen? Yes you can.
I use both DVD and HDV depending on what I am doing. HDV is for High Definition output while DVD is for standard definition output. (for some reason I think High Definition needs to be capitalized but standard definition does not- that's strange).
You did notice that you can change the resolution in other ways than "Allow the source to control the frame size", right? If you want to deliver in wide screen that other dimensions than the ones your source file has, you can do that.
All my stuff is widescreen, and I hardly ever check the "allow source to control frame size".