I have a 720p (1280 by 720) video that I'm adding a watermark too. I have the entire thing setup, but after I use the Share function to create a 720p HD MPEG, the video shows up with letterboxing all around it.
Why is the video being shrunk down (scale wise) on output and not perfectly fitting the new 720p video?
What preset have you selected for your Premiere Elements project, Ryan?
In version 8, there is a setting for 1280x720 video. As I say in the Basic Training for Premiere Elements tutorials at Premiere Elements support site Muvipix.com, your project settings must match your source footage.
If your project preset matches your source footage, you should get 16:9 output using one of the standard Share presets.
But not all footage works successfully in Premiere Elements. Video from still cameras and from pocket camcorders, per the FAQs to the right of this forum, often don't interpret correctly.