Hey guys,
Had the same issue. This may or may not solve it. But I havent had the shrinking in over a week (and it was doing it everyday for me) All I did was while the phone was connected to the Appradio I went to Settings-General-TV Out and switched "Widescreen" off. It seems even when switched off the unit displays the video in the proper aspect ratio but the overscan issue doesn't occur.
**UPDATE** Nope still fucking does it. Just was lucky during my drives I suppose.