Hey John,
Just to let you know that I tried using the nexted projects method you described and it worked a treat!
I wanted to let others know that, when using this technique, it’s really important that you limit your pan/cropping until you import the nested project into your main project.
Sony Vegas is funny, because the first time I used this method, I cropped the original to a 16:9 ratio. When I brought this nested project into my main project it showed correctly in the preview, but when I rendered it the nested project had shrunk to a mini 16:9 video within the main video! Going back to my original nested project, changing the pan/crop setting to ‘default’, bringing it back into my main project and pan/cropping it in there solved the ‘problem’!
Once again thanks to John for his advice – it’s definitely a technique that I will be using a lot!