You don't understand...
The image is designed to be viewed in 16:9, but the actual resolution is still 640x480 (a 4:3 resolution). The image is compressed into 4:3 and the TV must then stretch it. As a 4:3 image, you are increasing pixel width when filling your screen and reducing image quality.
With HD resolutions, the actual pixel count results in a widescreen image. With 480p that is not the case. Every Wii game is limited to a maximum of 640x480 pixels. No matter which setting is selected, the Wii is rendering and outputting a 4:3 pixel resolution. When 16:9 is selected, the image data is squished to allow for stretching...but that doesn't mean the actual pixel count changes.
If you wanted to render a game with black bars on the Wii, you'd effectively be decreasing the 640 pixel count.