It's unfortunate, but it seems that the "ignorant masses" if you will just can't stand black bars, no matter how much you try to explain why it's good that they're there. It's stretched for the same reason they still sell pan & scan DVDs... There are going to be three types of people: those who hate black bars and complain if they're there, those who don't care either way, and those who hate the stretched picture and want the black bars. I'm sure they chose to go this route because 1) the third category (which you and I belong to) is the smallest, and 2) that category is the most likely to be able to figure out how to operate their electronics well enough to un-stretch it manually.
But it would have been nice if they added a second option under the TV format in the menu for "virtual console 16:9 stretch, on/off".
That said, I'm not planning on buying VC games anyway, since I've already got most of the NES/SNES/Genesis/TG16 games I want to play.