Hi -
The field of view changes only slightly: 720P is, after all, a 16:9 format, rather than a 4:3 format. When you film, the upper and lower parts of the frame are blacked out.
I'm not an engineer either, but basically it's a software thing. When you take a still photo, values from the sensor are read in a large dump to a file in memory and is then converted into RAW or JPG format according to how you camera is set up. When you tell the camera to record video, values from the sensor are streamed continuously via filtering (i.e. not as a raw file) to your memory device of choice. In order to speed things up, values are cross-referenced and combined (aka binning) for the appropriate format.
Theoretically (and in reality, as we've seen with the Panasonic hacks) the 720p limit on the EP1 is arbitrary and with alternative software (and hardware!) you could generate video as detailed as the sensor. Heat problems, data bottlenecks and the like prevent this, though.
JohnF
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