I'm thinking about getting the EX1 too and flying with V7, but have no practical experience with the combo yet.
My impression (and intended workflow) is to encode using Cineform's Neo HD. WIth that, there should be no problems in the slightest, from what I understand.
"Vegas should take care of the down conversion itself. "
Not really, there's a number of issues you might need to wrangle.
You would want to edit on a 50/60i HD T/L, have Project properties de-interlace set to something other than None. You need to watch how certain FXs are applied as well. Applying things like sharpening before downscaling will give you problems.
If you shoot progressive then the very high res from the EX1 will likely require you to wrangle the resolution during the downscaling or you'll have aliasing and line twitter problems with many display devices.
The EX1 does both 1920x1080 and 1440x1080 in HQ and SP respectively.
Gareth, I just use HD 50i although you could use HD 50i, either seems to work OK regardless if you're going to SD. For SD then FullHD is probably overkill unless you want Progressive, then you have to shoot in HQ however so far I'm pretty happy with SP and 50i.