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The 16:9 property is just a flag set on the stream that tells the player to resize the picture on playback. As G_M_C said, the video is encoded at the same resolution either way. And the preview just shows the video it will send to the encoder.
DVD-RB sends the encoders raw video and has them encode it in a standard way, then it copies the flags from the original video on to the new video during rebuild. This saves RB the hassle of detecting the flags and translating them to each encoder's setting and also provides a workaround for situations where it would be impossible for the encoder to exactly duplicate the original stream. Because of this 'simplified' process, the encoder settings may not match the original video, but the final output of DVD-RB should be fine.
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