When I try to set this game to widescreen, it actually makes it narrower than regular 4:3. What gives? This is driving me nuts.
Yup this game uses "fake" widescreen in a manner of speaking. It does not change output resolution when set to widescreen. As you noticed, you had to tell the TV to stretch a non-square 4:3 image
You have to set your TV to 16:9 mode. It's anamorphic widescreen probably. So when the TV stretches the image to 16:9 it looks correct.