Check out my latest tutorial:

http://www.wideopenwest.com/%7Ewvg/tutorial-4.htm and also see a actual video on the effect over at Chienwork's site http://www.vegasusers.com/vidshare/

Vegas has a FX cookie cutter filter plug-in as part of the package.

The cookie cutter does as its name suggests. It can cut out (mask) part of a video. In my tutorial I show how to move an object along a path using a still image of a road map as the map is panned, in effect making a video out of a still image.

A fairly common use is to mask out someone's face or license plate by bluring only that part of the video. Using keyframes you can accurately block out only the part you want.