The final video will be made to be widescreen, so 16:9 should be fine.
Wait, what? The final video will be 16:9?
All of the footage that people have submitted is in 4:3. If you wanted a widescreen video, then you'd have to change the aspect ratio of all the footage. This is a big no no. If all (or most) of your source footage is fullscreen,
then leave it at fullscreen.
If you're making the video widescreen just for the sake of making it widescreen, then it will be a giant mess. It does absolutely nothing to the quality of the video, except make everything look fat and make the filesize even higher then it has to be.
Making the 4:3 footage into 16:9 will not help integrate Killerjaws' recordings any better either. Combining the two would make the original 4:3 footage appear fat compared to Killerjaws' footage, and it will be even more noticeable in the video. (when you transition between the upscaled 16:9 and actual 16:9, the difference is extremely noticeable)
Best option, besides getting Killerjaws to re-record in 4:3, would be to just crop his footage. Hopefully he and his opponent took the 2nd and 3rd controller port. Otherwise, the portraits and names of the characters will be cut, and that looks really ugly. Another problem with this is that the footage will not pan out correctly when someone goes flying off screen, due to chopping off so many pixels from the sides. (vertical kills look fine, but horizontal kills look really weird)
tl:dr
Widescreen...
1. Will make everything look fat
2. Will take longer to encode
3. Will increase the filesize
4. Will do nothing to the quality
4. Don't do it.