Ok, total fail on trying the 1280x720 test. I know why now, and will retest tomorrow. 1) when viewing in Live View, even on 1280x720, your live view screen is bigger than 1280. So if you set your screen aspect ratio bigger than 1280 (say 1600 like I did) your shot will look stretched and deformed. Booo, and double boo because this should've been obvious up from. It's what I get for helping engineers debug complex transactional middleware infrastructure and then try to shift into camera mode.
Moving on....