I've found that with my JVC, I still see the bars. It is totally something I'm used to, but when I switch things up in my basement, I will probably go all out with some sort of masking system. I can't even figure out if I'm going to go 2.35 or not. If I go 2.35 it may be a 170" diagonal or so to really use the width, but I'm not sure what will really happen at that point.
What you chose to do, in regards to 2.35 vs. 1.78 is what I always tell people. If you have the height to go 16:9, ALWAYS go 16:9. If you are height limited, and have the width, then 2.35 is a good way to go, but you must get a projector with motorized presets to switch between movies.