If you want to make nice looking MP4 files in Vegas at 1280×720 try this:
Use the Sony AVC render type and start with the Memory Stick SD NTSC widescreen – 2128 Kbps template. Then press the Custom… button and make these changes on the Video tab:
Video Format: AVC
Frame size: (Custom frame size)
Width: 1280
Height: 720
Field order: None (progressive)
That should give you pretty good quality for a Bit rate of only 2K. You can take the bit rate up or down from there to find the right balance of file size vs quality.
~jr
http://www.johnrofrano.com
http://www.vasst.com