Of course it will support 4:3 sets, but you will have 3 options...
A: best scenario - View the game in letterbox. You'll have black bars, but you will see the whole game.
B: 2nd best - stretched letterbox. Same as letterbox, but the image is streched to fill the gaps where the bars would normally be. You get all the game, but characters will look tall.
C: worst - zoomed. This would be where the outer edges of the game are cut to fit on your screen. You won't have any bars and you'll have the proper sizes, but you'll be missing parts of the game.
Developers are not going to make two versions of the same game. One for 4:3 owners and one for 16:9 owners. Extra content has to be added to the game for 16:9. If MS is forcing this on developers, the above three choices are your only options.