Heroglyph is the best for it, but you need a good way of making a path that's not crap. something like a wacom tablet or something similar. that or a mouse pen of some sort.
I have done this the old fashion' way using onion skin paper (or other thin paper)
and a magic marker. Write it in fancy swirls using a magic marker and film the
bleed through to the other side of the paper with your camera. Then mirror it in Vegas.
A slightly more high tech method - if your laptop/tablet PC has composite or S-Video
out, use your existing paint program and record the video out.
It doesn't require flash per sé. Just some artsy program that lets you record keyframes or simply a sequence of stills while you rub-out. Could Vegas erase on a freehand basis? I don't think it offers such fine handcraft editing.
Bauhaus-Software's Mirage and Mimio's electronic whiteboard software does this. You may be able to get hold of the older non-object-oriented Mimio software for free from their support site - not sure. Then apply a nice font like in the above tutorial onto a Windows pbrush cell, save it and use mimio to record the erasing. Then reverse this in Vegas and apply a luminance derived key/overlay.
If you search this forum, I posted awhile back a way I found to do this with SpiceMaster. (I did not invent the methodlogy, I just found where it was posted.)
I actually used SpiceMaster method this for a production peice and it worked great.
Once you "get it," it's not that hard. You need to have SpiceMaster.
I think I had to do this something 13 times or so for a peice. It worked great and I would use it again.