Just played around with the settings on my ICS GS2, and having Auto fit checked does make some difference.
I went to www.abc.net.au and then to their "Just In" new section. The text lines appeared to be much shorter in different parts of the page, so that I could zoom in to a certain degree without needing to scroll sideways to read the whole line.
Another one I noticed in the browser settings under Accessability is "Force enable zoom". Not sure what this does, but it is unchecked on my phone.
Not an expert on web pages, but maybe it is down to the design of the individual website?
Hopefully there is someone here that is more knowledgable than I am...