The post reads cropped but then talks about squeezed, so I gave a little extra info to help clarify.
One possibility is that the final image is cropped, ie some texel data is being removed completely from the image such as the top and/or bottom rows of texels.
In this case the image is considered just like it is worded "cropped".
Another possibility is the image is being rescaled, meaning that the entire image is kept but an algorithm is being used to compute new texels to fit the final image size and keep as much of the original image as possible.
Normally rescaling is done in a way that keeps the original aspect ratio, but when that isn't possible then the texels are effectively stretched or squeezed. Which is the second option listed in the question.
Edit: One possibility here is to modify the frustum to fit the entire image then rescale the image to fit the frustum. Is this possible here? (I'm guessing not but thought I would mention it)
Yet another approach is to introduce black(or some other color) bars on the top/bottom/left/right of the image and fit the frustum to capture the entire image. The image itself would be nearly exactly what is needed but the end result would have the dead space. Just like how a widescreen movie is fit to a 4x3 television.
If cropping is the only viable option then usually the bottom of the image is cropped, but this is getting into the realm of opinion and may be something you want to go back to the client to get clarification on. (and is also wandering out of my knowledge area since I am used to having that handy gpu available to manipulate the image to my every whim)