I've had the displeasure of seeing Transformers in pan-n-scan format, blown-up and on VHS. I didn't think it was good at all, but the cropping (and lower resolution) really kills the size and scope of the film nonethless.
Some films shot in 2.35:1 scope format are shot in the Super 35 format. During shooting, the director and cinematographer mark off the space so that when the film is in post-production (I think the Terminator 2 DVD has an excellent explanation of this process), the 2.35:1 prints are made. But the films shot in Super 35 the way they shoot it, the full-screen version cuts less off the sides while providing a little bit on the top and bottom of the screen. But still that's a significant change compared to the 2.35:1 image. And films that use extensive CGI are hard-matted for the 2.35:1 image, so those end up being pan-n-scanned as well.
One example: Harry Potter and the Prisoner of Azkaban was shot in Super 35, and even that uses pan-n-scan from time-to-time. In the full theatrical ratio, during the opening scene where Harry is practicing the Lumos spell in his bedroom and wakes up his uncle, you can clearly see Harry on the left pretending to be asleep and his uncle checking on him. In the full-screen edition, it seems to pan from Harry to his uncle so that the audience will know what's happening.
One great example for this process is Ben-Hur. The film is shot in even a wider format than 2.35:1 -- 2.76:1! The pan-n-scan process reduces the film to unintelligible gibberish, trust me, once you see that movie in pan-n-scan you'd never go back to foolscreen again.
