Based on what is mentioned in the HC40's manual, the 16:9 mode uses more of the CCD chip in the horizontal dimension than the standard 4:3 mode, which means that the HC40 supports true 16:9 wide-screen recording (NOT just throwing away pixels).

This information is not directly mentioned in the manual, but if you are a careful reader you'll spot the following:

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Quoted from page 68:

"You can record a 16:9 wide picture on the tape to watch on a 16:9 wide-screen TV ([16:9WIDE] mode). With this function [ON], your camcorder offers even wider angles when you move the power zoom lever to the "W" side than recording in [OFF]."
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Read the last sentence carefully. The key words here are "wider angles". What this means is that when in 16:9 mode the camcorder HAS to use more of the CCD (at least horizontally). That's the only way to achieve a wider angle without moving the optics.