Yes, the extension of the picture at edge the using an active halo ring was meant to extend the picture gradually to infinity. It's not abrupt because when seated at the correct distance from the TV screen the halo edges are actually in the peripheral view of the eye - no color there just b&w light detection - shapes with no clear definition. Psychologically, the mind fills in the rest. I think your story about gamma correction is mute since most TV manufactures in the 1950's thought Sylvania's halo light was a gimmick. To a great extend I agree with you that it's still suspect even today. Heck, the same concept is being marketed today by Philips as "ambilight" HD television. Kinda wierd that the ad copy didn't make that clear. Here's a live link from Philips to explain what the halo "ambilight" process.
http://www.flattv.philips.com/shome.htm
Marketing madness for sure but it's kinda cool
