With respect to the option "Extend picture to" (under Preferences > Video > [Video Rendering]) I already indicated that I think the 576 line option has to do with 576 line interlace PAL and the 480 line option with the 480 line interlace NTSC display.
Further, as long as you're really "extending" the picture (which depends on the original (real) ratio of the movie vs the screenratio of 4:3), it works.E.g. if in full screen mode the
background is shown as black bars at top and bottom of a video.
By "extending" you can then add similar black bars to the picture itself so that the black bars shown are in fact no longer shown as 'visible' part of the background, but they have become part of the movie-picture itself shown in front of the background.
