Vegas automatically scales anything (up or down) added to a project to match the project settings. If you were to add a PAL miniDV clip to the timeline, it would scale your 720 x 576 clip to match the HDV 1080-50i format template. The same thing happens with stills, even if they’re larger than the project properties.
…HDV 1080-50i format template – which to my understanding is 1440X1080 – IE 4:3 …
It really is 16:9. Take a look at the clip properties and, beside Pixel aspect, it says 1.3333 (HDV 1080). This is the “magic” key. The 1440 x 1080 image is stretched to be 1920 x 1080 (16:9) when displayed.
I’m really not sure why you’re having problems. I downloaded an HDV 1080-50i clip, dropped it on a timeline and set the project properties to match. I extracted a still from this video clip and stuck it ion the middle. I then rendered it out, just like you did, to a HD 720P Windows Media File and everything looked the way it was supposed to be. No stretched images anywhere on the timeline or in the rendered video.