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When projecting a raster using IRasterGeometryProc::ProjectFast, the cell size of the output raster is not square even though the signature allows a square cell size to be specified.
This is a known problem with ArcGIS 8.1.
This problem has been addressed in ArcGIS Version 8.1.2.
In ArcGIS 8.1, do the following:
n*Cell size = Extent in X dimension and
m*Cell size = Extent in Y dimension.
The sequence you follow does matter.