I won't bore you with the details but after four test runs with an 8 minute, 720 x 480 mpeg file, I could not shake the pillar boxing (even after setting cropping from automatic to custom). However, I did not try the output file(s) on a TV that will upconvert (upscale?) the files. I just used the computer monitor.
To change the frame size in Handbrake I looked under the picture tab, changed the setting for anamorphic to custom, and changed the frame size (removing the check from "Keep Aspect Ratio" does give you more options for frame size). Make sure you check the display size at the bottom after you make changes. If you install VLC ( http://www.videolan.org/vlc/index.html
) you can preview the files or simply choose the default player for your computer without installing it.
If you have a TV that will allow you to read files from a flash drive you could try that instead of going through Tivo and that make make a difference. It appears as though the TV and not Tivo is doing the upscaling.