some games (battlefield2) will let you use a widescreen res and just stretch the image. in the case of ut2k4 you can tweak the fov to get rid of the 'fat vision'.other games (hl2/source) have 16:9 modes and its just as easy as picking the res. old games (quake2) you will most likely get screen overscan no matter what res you run in unless you run in a window, or your hdtv has a 'pc mode' which resizes the pc signal accordingly. if its a pc widescreen and not an hdtv set, it should either stretch with no overscan or have side bars with no overscan.
For some games you have to edit INI files, but it's pretty easy. I've made Splinter Cell 3 and Doom 3 demos run fine on my widescreen TV in 720p. Teh hotness.
Mostly it works fine out of the box. For games where it doesn't, I either use the URL above to find a workaround, or I play it in 4:3 with black bars at the sides, which I completely forget exist 7 seconds into the game.