This is something I've wondered about too. This kind of thing even causes debate within console fandom about what's the "correct" way to display things, because while it can be demonstrated what aspect ratio was displayed on TVs of the time, there can be the question of what aspect ratio the art in certain games was actually created for. Did the creators of the artwork take into account that the art would be displayed with non-square pixels and would therefore be displayed stretched at 4:3 ratios, or did they create art that looked correct with square pixels but is distorted on actual hardware? Hell, I've bumped into a few games where this is even mixed up because they change res in-game but use the same assets and didn't seem to have considered the difference in aspect ratio (Primal Rage on the Mega Drive/Genesis does this, for example).
Flashback's a good example because at 4:3 ratio the Mega Drive/Genesis version looks like the top picture. The problem is that there are some parts of the art, such as that blue thing around the selected item in the top right corner and some fans in the background of the second level, that look like they should be circular but are stretched into ovals. At 1:1 pixel aspect it looks like the second picture, and the pieces of artwork that appear to depict circles are circular. Emulated I always play Mega Drive Flashback at 1:1 pixel aspect because while it's not what I actually saw when I played it back in the day, the art looks like it was created to look correct that way.
I did play the PC version on a CRT back in the day too, but I can't remember what it looked like and I suspect I would have used the monitor's controls to fit it to the screen anyway.