Since I've heard conflicting opinions on Panzer Dragoon Zwei's widescreen setting being correct or not, I decided to put both modes side by side to find out the truth.
The game runs in correct Widescreen during gameplay but not during scenes or menus(considering how little time you spend on the menus and how there are grand total of 2 scenes you'll see per playthrough it's not a big drawback). It's pretty awesome especially for playing the game on an HDTV and in general having a wider view helps in a game like this.
It also doesnt suffer any issues in widescreen mode; no framedrops weird pop-in(more than the usual). I'd say turn it on and never switch it off
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