1) This can be done easily in Vegas Studio 6. It's substantially harder in versions 4 and earlier. Place two copies of the video on the timeline in two tracks, one above the other, lined up to play simultaneously. Apply the blur effect you wish to the lower track and the cookie cutter effect to the upper track, selecting "Cut away section" for the Method. This will show the unblurred track everywhere except where the cookie cutter shows the blurred track underneath. Choose an appropriate shape and size and position it over the person's face.

In Vegas Studio 6 you can use keyframes to move the cookie cutter around the screen to follow the person's face. Add as many keyframes as you need to follow the motion.

In versions 4 and earlier you must use Begin/End to specify endpoints of a straight line of movement. Every time the subject changes direction or speed you'll have to split the clip and set new end/begin points to follow the motion. Unless your subject moves very little it probably isn't worth the effort.

2) There are a couple of things you can do in Vegas Studio without using the credit roll feature. You can use the regular text function to type a very tall block of text. Use the Placement tab to position the top of the text below the bottom of the screen at the start and the bottom of the text above the top of the screen at the end. The text will scroll smoothly across the duration of the event. Since it's a regular text block you can do freeform formatting, using as many combinations of typefaces, styles, and sizes you wish.

Another option is to create your credits as a very tall still image file in any image editing software. Place this still image as an event on the timeline and use Pan/Crop to move it from below the frame to above the frame, similar to using Placement for a text event.

Sorry, can't help you with the flash problem. I haven't used flash enough to know.