MeGUI - Clever Anamorphic Encoding?

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I'm encoding my DVDs via megui and ran across this option. I searched for answers here and on google and thought I understood what it did. But I ran a test on some clips and think I confused myself somewhere.

I took some 1.85 content from a DVD and encoded a clip with and without the option. I figured that the encode with CAE would auto-stretch the displayed video, while the video without CAE would display at 720x480. In playing both files in VLC, both display at 1.85:1. In playing both in MPC, both display at 1.5:1 720x480. Am I confused or are things just as they should be?

On a related note, would it be wise to use this option for ripping 4:3 movies so they play at 640x480, or should I just resize them?

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I found out that MPC had a problem with resizing anamorphic movies so long as I was using the EVR renderer. When using VMR9 renderless, it has the same behavior as VLC, ie, it scales the clip to widescreen whether or not I enable CAE. So the option still confounds me. Doesn't help that the help wiki is down.