I didn't have much to add on the "Looney Tunes All-Stars" DVDs and the decision to present all the post-1954 cartoons in widescreen format (that is, with the top and bottom cut off). But Thad has some comparisons of screenshots from the fullscreen and widescreen versions, showing that compositions -- and sometimes even the ability to read signs -- aren't helped by the cropping.
I'll add a couple of things: starting in 1957 or so, the films seem to have gotten a little bit better about composing for the possibility of matting. I saw "Ducking the Devil" and a Road Runner cartoon ("Zip n' Snort," I think) in widescreen in a movie theatre, and they looked all right that way. "Ducking" looks OK on the DVD too. And you'll notice that even in that screenshot from "Mad as a Mars Hare," Jones made sure to keep the "Earth" sign in a spot where it wouldn't be cut off. Many of the 1954-1956 cartoons, however -- cartoons that were either made or begun before the studio shut down -- look quite bad in the fake widescreen; not only are the compositions bad but there's a feeling that the cartoons have been blown up or zoomed in.
The most irritating of all is "Lumber Jack Rabbit": the credits were not made with widescreen in mind, so WB has to present them in fullscreen (otherwise, as Thad says, they'd lose the copyright information), and then they switch to matted widescreen for the cartoon proper. And all of this without giving us the 3-D version that justifies this film's existence.
This thing does answer my question about why WB's "family entertainment" division was, according to rumor, reluctant to release any cartoons made before 1953. I wondered "why 1953?" Now we have our answer: they don't want to release cartoons in fullscreen. Yes, we're seeing a transition away from the days of pan n' scan to something arguably even worse: an insistence that all films shown on TV or home video must fill up the new widescreen TVs. I say this is even worse because it will effectively make it even more difficult than it is already for older films to get home video releases. Companies are now worried that customers will not accept a film that has those black bars on the sides.