Mark,
Yes, you are correct if the TV skips inputs because they are not active I would tell the setup that it only has 3 or 4.

My Toshiba is also a widescreen. Using the wizards did not allow me to setup a state variable for the widescreen mode. I had to manually add the state variable with the corresponding widescreen modes to the TV Device by modifying the XML for that device. After you add the state variable you need to modify each of Watch Activities to indicate which widescreen mode you wish to use for that activity (modes you defined manually in the TV device). There are directions on the website under the Help/FAQ section that describes how to do this.