Yeah, still hanging around but not really doing much anymore.
Not too sure how megui handles it, but there's 2 place you can set how it will correct the aspect ratio: inside the x264 stream(the sar setting) and inside the container itself(mp4/mkv).
Ideally, you want to set it directly inside the stream when encoding since it will have the best compatibility that way. For a default widescreen 720x480 DVD, you want to set the x264 sar to 853:720(so basically, new_width : old_width, can't remember the exact calculation I use, a bit complicated to understand looking back at my script).
You should be able to force megui to do that by setting the darx and dary both to 1 or the aspect ratio to 1:1 in the gui and modify the x264 settings sar option to 853:480 before encoding. Don't know if there's another easier way to tell megui to do that as I'm not too familiar with it(but I do remember you can set the x264 options manually), I prefer to do things manually to have full control over things.
If you go the container route, you just want to leave the x264 sar alone(so 1:1 or not set which is the default) and set the container DAR value to 853x480 for mkv or the PAR value to 32:27(Can't remember how I get those numbers, but that's also what you want to set to fix a wmv aspect ratio from 3:2(original dvd aspect ratio) to 16:9(widescreen)... and by typing that, I just remembered how: 2x16:3x9) for mp4.
As for your actual question, what you're doing is also what I think would be the logical thing to do, but megui is probably trying to be smart and doing stuff you don't want/expect it to do. You can try to set the DAR to 1:1 since it may be trying to correct it all on its own(that's what I had to do years ago when I first started, took me hours to figure out I needed to not tell it the aspect ratio I wanted) or maybe it wants the actual aspect ratio of the source input before correction which would be 3:2.
