No, you are really overcomplicating this. There's nothing going on in the D12, or in DirecTV's distribution. The content on both the SD and HD feeds is controlled by Hallmark.
I just checked the Hallmark SD and HD channels. The HD channel shows a regular 16:9 picture. The SD channel shows the same 16:9 picture letterboxed in a 4:3 frame. If the HD channel is showing something from a 4:3 source (like an old TV show) the HD channel will show the 4:3 picture pillarboxed inside a 16:9 frame. The SD channel will show the same 16:9 picture, but letterboxed inside a 4:3 frame. So what you see is the original 4:3 program pillarboxed to 16:9, and then letterboxed to 4:3 as well. The actual program only occupies a relatively small part of the screen.
This scenario has become quite common, where channels only generate one source (the 16:9 picture) and then use the same source on the SD version of the channel.
All of this is of course ignoring any TV settings you might have to stretch or crop if you have an HDTV. An old SDTV won't have any of these picture adjustment features.
Some channels still create the 4:3 version of their signal by cropping the 16:9 frame to fill a 4:3 screen, but this has its own issues in that you lose picture content.
