As I said, the DV format uses the same number of pixels when recording, for both available frame aspect ratios (D1 resolution - 720x576 for PAL). It is impossible to accommodate both aspect ratios using a single sensor without some sort of compromise or overkill, unless you go outside the camera.
Typically, a cheap DV camera will use 4:3 aspect by default, and will crop the top and bottom off the frame to yield a 16:9 image. This is the worst way to do it because (apparently) the eye senses horizontal resolution the most. You lose pixel data in the crop, but the result still needs to fill D1 so the firmware will resample the cropped image back up - akin to digital zoom, and that's bad. It's why your 16:9 image is fuzzy
A better way would be to use a 16:9 sensor and crop left/right if 4:3 were needed. You're still losing pixel data, but at least it's in the areas where you won't notice as much.
Internally, the best way to deal with it would be an oversize sensor, but even then you're losing data during the resample, because the pixels for the different D1 aspects have different shapes. To be able to do it without any loss would require a 1.2 gigapixel sensor.
Of course, there is a much cheaper way to do it:
Outside the camera
Use an anamorphic lens adapter. This would put the light on the sensor in the right place for the aspect ratio you want. The two downsides to this are that the DV codec will have the flag for 4:3 footage and the display in the viewfinder will look squashed.