Ya, its actually weird. We have an old rear projector HDTV ready 58inch Toshiba that I would say is from 2002/2003 taking up a bunch of space in the basement that is used sporadically. It too has the PiP function and will let me pick from any input I desire for either PiP 'box', although if memory serves it will only display one box in 16:9, the other has to be 4:3. Still, at least I have the option and in that case could setup an SD Rogers terminal and an HD terminal and would have proper aspect ratios for both PiP boxes.
As for why the 3100 looks stretched, even if I select 4:3 in the settings when watching on cable (which obviously fixes the stretching), as soon as I hit the the PiP/PoP function on the LN40B750 (it has both PiP and PoP), it is framed for 16:9 and I can't find any way to frame it for 4:3. Obviously whoever at Samsung wrote the code for this feature was only considering those who are watching OTA, and like you said, I would like to maximize my channel selection. I was thinking of using the RF output from an HD terminal to solve this but from reading one of 57's FAQ the other day, it looks like that will just create black bars both vertically and horizontally, although it may fix the aspect ratio from looking out of whack. I may move a 4250HD or a 4642HD from another TV in the house just to test and see if I can live with that. The other solution I was considering, which I am thinking is probably in the $100 or so, is going Component to Composite and then Composite to RF Modulator. But my gut is that I will likely lose my aspect ratio and have bars somewhere.