On the machine in my signature. No LUTS, just a color curve.

8-bit

32 bit

The above illustrates why it is always smarter to do your editing in 8 bit mode, then swap the project settings to 32 bit (if you need to to utilize the extra bit depth or to render HDR), add in your effects, color grade, then render. If you need to play back in 32 bit mode at full frame rate while doing this, you can use shift M to pre-render the scenes you need to see at full speed. This saves a ton of time over making proxies. If it still isn't good enough at 8 bit, you can lower the resolution in project settings as well, like to 8 bit 720p, edit that way, then swap to full res 32 bit.

Or, you can record to ProRes, and be able to edit 10 bit 4:2:2 at full resolution with no issues whatsoever. At least until the performance improvements that the VEGAS team is hard at work on are ready to start rolling out.

Here's MediaInfo for it:

General
Complete name                  : TA004579.MP4
Format                         : MPEG-4
Format profile                 : Base Media / Version 2
Codec ID                       : mp42 (mp42/hvc1/CAEP)
File size                      : 1.35 GiB
Duration                       : 24 s 691 ms
Overall bit rate mode          : Variable
Overall bit rate               : 469 Mb/s
Frame rate                     : 23.976 FPS
Encoded date                   : 2023-01-18 23:49:48 UTC
Tagged date                    : 2023-01-18 23:49:48 UTC

Video
ID                             : 1
Format                         : HEVC
Format/Info                    : High Efficiency Video Coding
Format profile                 : Format Range@L5.2@High
Codec ID                       : hvc1
Codec ID/Info                  : High Efficiency Video Coding
Duration                       : 24 s 691 ms
Bit rate mode                  : Variable
Bit rate                       : 469 Mb/s
Width                          : 3 840 pixels
Height                         : 2 160 pixels
Display aspect ratio           : 16:9
Frame rate mode                : Constant
Frame rate                     : 23.976 (24000/1001) FPS
Color space                    : YUV
Chroma subsampling             : 4:2:2
Bit depth                      : 10 bits
Bits/(Pixel*Frame)             : 2.358
Stream size                    : 1.35 GiB (100%)
Language                       : English
Encoded date                   : 2023-01-18 23:49:48 UTC
Tagged date                    : 2023-01-18 23:49:48 UTC
Color range                    : Full
Color primaries                : BT.709
Matrix coefficients            : BT.709
Codec configuration box        : hvcC

Audio
ID                             : 2
Format                         : AAC LC
Format/Info                    : Advanced Audio Codec Low Complexity
Codec ID                       : mp4a-40-2
Duration                       : 24 s 683 ms
Bit rate mode                  : Constant
Bit rate                       : 256 kb/s
Channel(s)                     : 2 channels
Channel layout                 : L R
Sampling rate                  : 48.0 kHz
Frame rate                     : 46.875 FPS (1024 SPF)
Compression mode               : Lossy
Stream size                    : 763 KiB (0%)
Language                       : English
Encoded date                   : 2023-01-18 23:49:48 UTC
Tagged date                    : 2023-01-18 23:49:48 UTC

Other
ID                             : 3
Type                           : Time code
Format                         : QuickTime TC
Duration                       : 24 s 691 ms
Bit rate mode                  : Constant
Frame rate                     : 23.976 (24000/1001) FPS
Time code of first frame       : 06:35:24:01
Time code of last frame        : 06:35:48:16
Time code, stripped            : No
Language                       : English
Encoded date                   : 2023-01-18 23:49:48 UTC
Tagged date                    : 2023-01-18 23:49:48 UTC

With my desktop (RTX 2080/ UHD 770) I get the same (good) performance as John in 8-bit full mode. I am using QSV decoding in preferences/ file io.

However in 32-bit video or full (which you need to use for the render to get the most out of a 10-bit log source) the Intel QSV for decoding and NVIDIA for GPU use lead to decoding glitches making it unusable, which is a problem in previous versions of VEGAS as well.

[Edit: as a workaround if you change the GPU in preferences/ video to the Intel iGPU and restart VEGAS before rendering it should work. Just put it back to normal for best editing performance.]

For me, I see the decoding issue with HEVC 10bit 422 only in following combination:
a) Options/Preferences/Video: RTX 3070 Ti
b) File I/0 hardware decoder to use: Intel Iris Xe Graphis
=> I see the decoding issue

with the other possible combinations I see no decoding issue with this type of footage

TEST 2
a) Options/Preferences/Video: RTX 3070 Ti
b) File I/0 hardware decoder to use: RTX 3070 Ti
=> I do not see the decoding issue

OR

TEST 3
a) Options/Preferences/Video: Intel Iris Xe Graphics
b) File I/0 hardware decoder to use: Intel Iris Xe Graphis
=> I do not see the decoding issue

OR

TEST 4
a) Options/Preferences/Video: Intel Iris Xe Graphics
b) File I/0 hardware decoder to use: RTX 3070 Ti
=> I do not see the decoding issue

Funny enough, test 3 shows the best playback performance for UHD 50p HEVC footage. 

 I have these settings in my Preferences in VP20. Are there better settings that might improve performance with Canon R5's H.265 4:2:2 10-Bit mp4 video file.

Hardware decoder to use in the I/O preferences should be set to the i-GPU or GPU. You have not set that (only for raw).

When VP20 was first released I found that the I/O hardware decoder had to be set to off just to be able to preview even the Canon 8bit mp4 video files on the timeline, never mind the Canon10bit video files. On my laptop I had a QSV... option for the hardware decoder that worked but do not have that option on my tower PC. Todd-A0's results above appear to indicate that VP21 has not yet improved rendering speed for this Canon 10 bit file. Maybe an update will improve VP21 for Canon video files or I may have to wait for VP22.

Todd-A0's results above appear to indicate that VP21 has not yet improved rendering speed for this Canon 10 bit file. Maybe an update will it improve VP21 for Canon video files or I may have to wait for VP22.

That is unfortunately correct, we all still have non multithreaded CPU decode on your file, which is the number one reason playback is so slow, if we did have multhreaded CPU decoding it would be much faster but still limited by Vegas's non updated render engine, People with GPU decode of 422 10bit can mask the problem to a limited degeree, because the GPU assistance means there's less work for limited CPU decode cores to do and less of a chance it will drop frames with simple playback. But actually editing with it, color grades, fx's , people will see lagging even with GPU decode.

When VP20 was first released I found that the I/O hardware decoder had to be set to off just to be able to preview even the Canon 8bit mp4 video files on the timeline, never mind the Canon10bit video files. On my laptop I had a QSV... option for the hardware decoder that worked but do not have that option on my tower PC. Todd-A0's results above appear to indicate that VP21 has not yet improved rendering speed for this Canon 10 bit file. Maybe an update will improve VP21 for Canon video files or I may have to wait for VP22.

@terry54321 Did you test it with legacy HEVC unchecked and the Intel iGPU doing decoding? First enable the iGPU in your bios. This CPU has an UHD 770. Only Intel GPUs can decode 4:2:2 HEVC. If you do that you should be able to get similar playback to Wolfgang and myself who use similar GPUs.

If you only have NVIDIA you'll end up with framerates like what Todd sees as it can't decode 4:2:2 and VEGAS doesn't use other GPU compute abilities to make up for a lack of decoding support (or at least not adequately). [Edit: render speed is directly connected to decoding as if it can decode the file faster it can also render it faster]

When VP20 was first released I found that the I/O hardware decoder had to be set to off just to be able to preview even the Canon 8bit mp4 video files on the timeline, never mind the Canon10bit video files. On my laptop I had a QSV... option for the hardware decoder that worked but do not have that option on my tower PC. Todd-A0's results above appear to indicate that VP21 has not yet improved rendering speed for this Canon 10 bit file. Maybe an update will improve VP21 for Canon video files or I may have to wait for VP22.
 

Decoding of 10bit HEVC 422 is neither supported by nvidia, nor by AMD GPUs. It is only supported by Intel i-GPUs. So playback behavior of this type of footage without an i-GPU is weak.

Render support is another question.

I unchecked Enable Legacy HEVC Encoding in File I/O and enabled iGPU in my ASUS Z690 Formula motherboard bios. However, when I opened VP20 I did Not see the option in File I/O to select iGPU for Hardware decoder only OFF or NVDEC.... I tried rebooting my PC and got a Message from Windows that some feature that I assume uses the iGPU had been configured. When I tried to start VP20 again I got the message that Vegas Pro stopped working. After a few failed attempts to get VP20 to open including CTRL Shift Vegas reset, I then uninstalled and reinstalled VP20 and still could not open VP20. Finally, I disabled iGPU in the bios and now VP20 opens. I wish I could get iGPU to work for the hardware decoder as it would be nice to get smoother preview playback on the timeline as I have had to use proxies for editing the 10bit HEVC 422.