This might be old news to several folks, but I felt it important to pass along, as I just learned about it.

I called Nintendo today because my Virtual Console (VC) copy of Super Mario Bros 3 contained glitches on the right side of my plasma flat screen whenever I'd move Mario forward (this was especially noticeable when running quickly on screen). The Nintendo rep gave the same advice found here:
http://www.nintendowiifanboy.com/2007/10/11/fix-revealed-for-resolution-issue-on-neogeo-games/

While the nintendowiifanboy.com article references NeoGeo, this fix can be made for any VC game (according to the Nintendo rep).

Here is the summation (leveraged from nintendowiifanboy.com):

Boot up your VC game of choice
When it loads with the squished screen, hit the Home button on your Wiimote
Head into the Operations Guide
Once inside, plug your nunchuk controller into your Wiimote, then simultaneously press A+Z+1
You should hear a sound, signaling that the Wii has been set to Interlace mode

The Nintendo rep told me that the settings are "saved" and that I do not need to do this operation each time I load a VC game.

Of note:
I'm using composite cables (for compatibility with my switch box).

I hope this is helpful.