[Michael Acres]

thats a bit slow for handling AVChd files but you could transcode to HDV mpeg2 and your computer should handle it.

[Michael Acres]

Then why do you need best Quality when both DVD and Youtube are highly lossy outlets?

But to answer your question:

XDCAM EX with a frame size and framerate that matches your input files

[Michael Acres]

Keyframing is the only way I know to do it

[Michael Acres]

I could be wrong but I thought 5DII shot AVCHD and when imported onto a windows system would create MTS files.

Sounds like your files were imported via a Apple system and converted to Prores or some other apple codec in a mov container that Sony Vegas isnt loving

[Michael Acres]

Tools > Scripting > Batch Render
Vegas pro has batch render, just look up how to use it

the MP4 files you creating are similar to the original MTS files your camera creeates. They are both H.264 and VERY hard on your CPU.

You had it right when you were creating HDV m2t proxies, you just need to figure out a workflow so that when your ready for final output you can switch back to the original AVCHD files

google and youtube have plenty of tutorials on these things

[Michael Acres]

go back to your original projects and render them as widescreen?

And to answer your question, yes you can, just load the 4:3 videos into Vegas and then change each clips aspect ratio to 16:9 and then render as widescreen.

[Michael Acres]

I have tried all 3 but it doesnt make a difference.

I didnt think Project Properties affected the output?