Something similar to this was done at my old job, about four years ago. It took images that were not square and padding out the shorter dimension with an averaged colour from the edge. It looks like so:
Sometimes it works well, other times it really doesn't. But it's an interesting idea- and certainly not a new one (though Apple has certainly done it better)
http://i.imgur.com/6WZCQ.png
Sometimes it works well, other times it really doesn't. But it's an interesting idea- and certainly not a new one (though Apple has certainly done it better)