I honestly don't know. All the movies I've rented were HD. Ultimately you may just have to rent one to find out. Or, if you have a SD movie at home, encode it to MP4 with Handbrake and then transfer it to your GNex to see how it plays.
Hoping for a full screen option I guess. I didn't know some people prefer that over widescreen
I do not think they are looking for full screen as in 4:3 but are looking for the entire screen of the phone to be filled. The HD movies are 16:9 and will have letter box on top and bottom which is normal since the original Movie is filmed in a different aspect ratio.