Since he’s saying he sees less I’d guess the issue is with overscan 'cause it makes everything bigger than the screen would normally display and hence, easier to see where you should be hitting, while cutting off the front and/or back of the image, hence not letting him see as much of the stage. Although I suppose you’d also see less detail in the stage with the reduction in resolution caused by decreasing it and might miss certain elements. It’s hard to be certain and knowing would be nice.
Equipment-wise, the tournaments may have two problems. The first is that they’re budget strapped, so they may have to use whatever they have made available to them. The second is that they’re time strapped, meaning they probably just use whichever setup is easiest. However, just so long as we’re considering high level play:
I’d say the standard to be aiming for optimum play in this case is Capcom’s design considerations. I can’t say I know them for certain but my first guess would be that its balanced for widescreen play, both because of their aforementioned increasing prevalence in the home market and because that’s what the original Vewlix cabinets had. Granted, if the maximum amount of space allowed between players is merely a 4:3 arena encapsulated by invisible walls, with the extra area merely acting as a prettier sidebar like in the current generation’s version of Marvel vs. Capcom 2, whether or not overscan is used is merely an aesthetic consideration.
However if the playable area is a different size, that’s another story altogether. This has a geometrical effect on the game, as an attack that spans ‘across the entire screen’ could have a greater horizontal span but may possibly take up a lower percentage of the overall battle arena, giving you space to dodge it. The aspect ratio of the screen would then be important because positioning yourself properly a bit harder when you can’t see where you’re going and it might end up with periods where you or your opponent are hidden from view.
Granted with enough practice you could probably learn to use this advantageously but that may creates a split in the standards of gameplay, pendent on whether you can actually see what’s going on or not. Not a preferabEven if Capcom tried to metagame the system and altered the size of the arena to match the aspect ratio, it still wouldn’t work because then the moves would have different levels of effectiveness pendent on which aspect ratio you were using. Sonic Booms will work better in a widescreen arena if they travel the full width of the screen, while there wouldn’t be as much space to make a gap between players for a Shoryuken uppercut in a narrower screen. I don’t think they’d do that though…
Granted, that’s all just theoretical since I don’t actually play the game to be certain of the true effects. XD I’d still seriously consider a taller widescreen monitor with an equivalent horizontal pixel count since that’d magnify the image and encapsulate a widescreen aspect ratio allowing you to see everything you want to.