I just bought a switch a couple of days ago because I only have one component input on my TV and I wanted to keep my cable box connected to it plus the wii. I had the same issue, that the image wouldn't show up as widescreen even though i picked the 16:9 and 480p settings. I even tried hooking it up to the tv and i had the same issue. The only way around it is to change the setting on the TV itself to widescreen to get it to show up properly.
I find this really annoying. I dont see why I should have to take an extra step for the image to show up in 16:9.