It should look something like this:
http://i55.tinypic.com/33xzytt.jpgWhat you are look at though is 1080i HDMI PC.
Crazy Idea's off the top of my head to try as I have no idea and very sorry for wasting time and going over things you may of tried or know about already...
The game is 100% 16:9 widescreen compatible as you can see in the picture of my screen. I have tested both 720p in the past and 1080i is fine (Max my screen will do).
Are you using a HDMI lead, have you tried using a Component lead... or the other way around?
Is your 360 in 60hz or 50hz? (I don't think you can change it tho via HDMI and it's locked to 60hz). Does your TV support 60hz as some early LCD screen did not do 60hz in the UK.
Have you looked to see what your TV it's self is displaying? Maybe the game is being displayed in a mode that your TV has not been yet set too? Maybe try Auto Config or Reset if your TV has these options. Strange as it reads, your problem sounds more like a VGA thing when a new screen mode is being displayed for the first time that has yet to be stored in to the screens memory...
Can you set on your screen HDMI PC. HDMI PC will in fact display more than HDMI DTV. As an example at 720p HDMI PC will display the full 1360x768 pixel ratio where as HDMI DTV will cut the sides off.
Do you have another screen to try your 360 on? Any friends or family have a 360 to test.
Have you tried the crappy Composite video lead that come with the 360 to see how it displays?
Try 480p as this gives you an option to display it in normal and wide.
I have not looked at the demo as I have the full game and 2GIG is a couple of hours work for me. I have an LG screen.
Sorry once again.