what i mean is will it pixelate the 420 wide by 310 height photo, or will it just center the photograph inside the larger viewable area?
...or do I have to make a 700 wide x 480 height black box under my smaller images to have it center properly with stretching the photograph and making it pixelated / distorted?

if the image is larger the image display area then the image is resized proportionally and aligned in the center.