Due to backwards compatibility needs and for flexibility this needs to be controlled by a gameinfo setting (fullscreenautoaspect):
0: Treat all images as having an aspect ratio of 4:3, this is the default for compatibility reasons
1: Scale all images to fit the screen, i.e. either pillarbox or letterbox them.
2: Scale all images to fill the screen.
3: Scale all images so that the center 4:3 area is always fully visible. This is the recommended mode for 16:9 images designed to be shown with the sides being cropped on narrower displays.
A new DTA_ tag - DTA_FullscreenEx also exists which allows specifying the scale mode directly
Parts of this menu suffered badly from lack of screen space to convey the intended information due to the oversized fonts. With the new font this is a lot less problematic (unless using 320x200, of course)
Since this needs to do cursor positioning calculations it's the one spot in the entire engine where UTF-8 would simply be to messy, especially when having to deal with double wide characters.