Yep, I watch on a 2nd screen on a 4:3 TV. When I try to get a 16:9 SVCD movie to crop to 4:3, nothing happens. Works just fine on a divx/xvid.
In the case of any commercial MPEG file (VCD or DVD) the black borders are encoded into the format to allow for compatibility with TVs. In order to do away with these borders VLC and other programs have a crop function and it does work in VLC I just checked it. For this type of encoding IE a 16x9 movie in a 4x3 format, the the aspect ratio can not be changed correctly.
In the case of a cropped video such as XviD or DivX ( these are usually cropped during the encoding) either doing additional crop or changing the aspect ratio will appear to do the same thing. However crop was mainly designed for encoders and aspect ratio for playback. Today most decoders read the flag in the video and present the video in the correct aspect ratio. In a number of DVD only players the crop function as been redesigned and renamed Aspect Ratio, however when you play a cropped movie such as DivX or XviD the function no longer works correctly.
I would suggest checking it again. I'm using one of the newer Nightly Builds but this really shouldn't make a deference as it works as I remember it and as I have just described.