Michael, did you find the solution to your problem? I do encounter the same issue with Vegas 8c. I tried various projects settings and various type of transitions, each time the rendered file has these bad choppy transitions. On my side, all the sources are in 24p avi Cineform files(2 3 pulldown removal done with Cineform software). This could be the problem as when I try directly with the original 60i raw .m2t files from the camera and still output the final render at 24p, transitions are smooth as they should.
Thanks