VideoStudio :: Video Gets Smaller After Mercalli

I have been having the dreaded Mercalli re-analysed message and found a thread that described how to render just the clip first and then insert into the project. I have just a few short SD clips in my project, the rest are standard jpg's. I rendered the short video clip with Mercalli and then inserted that clip into the final project. The only settings that seem to work reliably (in rendering the small clip) are HDV720p HDV and WMV. Other settings still produce a clip with the Mercalli message on it. Why though is the rendered clip smaller on the screen than the original? When it is inserted in the project timeline, it plays with black borders all around it like it is in a window instead of full screen. I'm happy to get rid of the Mercalli message, but not too thrilled about this break in continuity of the project by having shrunken images.