Why is Amazon's HD Transfer Square-Screen?
Obviously a newer transfer since it's genuine HD.
Why isn't is masked for 16:9?
Since the movie was shot for 1:1.85, it probably would have been recorded as a squarish 1:1.66 format. Showing it squarish as 1.66, or 1.33 or 1.37, would be showing more than the 1.85 release, not less.
If most people has a 1.33 (1.37) VHS tape, they might be accustomed to that, and not want to see less of the scenery and beach bods, so an un-matted might be the best choice.
My iTunes HD download is 16:9. That's 1.78, instead of 1.66, so I'm seeing a little less than what was recorded on the film frame.
Also, I think it wouldn't actually be "masked" for 16:9, it would be blown up to fill the 16:9 frame, and also the display. I think masked, or matted, usually means you see black bars. They use the term "formatted" when the frame is cropped and blown up to full vertical size.
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The story is king.