It appears as if the option "16:9 on 4:3 display mode" setting serves dual purposes.
The setting itself suggests that it has to do with how 16:9 resolutions are displayed on a 4:3 TV. It does however appear as if the setting is also used to determine how 4:3 resolutions are displayed on 16:9 TV's.
Perhaps the setting shall be renamed to something more apropriate and that the terminology used for the choices are adopted to the actual chosen TV aspect ratio. The simplest solution may perhaps be introducing another setting named "4:3 on 16:9 display mode"
E.g. choosing "Chop sides" is not really the re-scaling that is done when a 4:3 picture is rescaled to fit a 16:9 display.
I actually missed the possibility to get 4:3 broadcast's to fill the whole screen due to the nomenclature used.