You shouldn't have to be going through all this crap with vegas, just to be getting a watchable DVD.
When you've got clips on the timeline,right click on a clip and it'll show you the properties,ie frame size and upper or lower or interlaced field etc. Set the project preferences as the same,you're probably doing all this anyway,but from what i gather,this doesn't effect the final outcome,that's decided by the render template.
I use the template which i posted if i film in interlaced or progressive.
Paul.

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PMW-EX1,Manfrotto, Sennheiser, Glidecam.