I also smelt a rat when Vegas was rendering I thought the 'No need to render' prompt would appear in the preview window, but it didn't.

Getting "No recompression required" for MPEG2 entails ensuring that your output template closely matches your source footage - including field order.

How would I know if the imported video when interlaced is 'upper field first' or 'bottom field first' anyway surely by default Vegas would import the file in it's correct format.

You can right-click on the file and check its properties on the media tab. Vegas will almost certainly have imported it in the correct format but you may not be rendering it correctly. Also it's worth ensuring that your project properties match the source footage as well - use the Match Media button on Project Properties.

I had massive trouble with smart rendering MPEG2 when first moving from MediaStudio to Vegas Pro and this is the post that solved it for me:

Sony Creative Software - Forums - Vegas Pro - Video Messages