You didn't mention if you're seeing this in DVDA3's preview, or on your finished DVD in a PC player or standalone DVD player. Results can often be different in those different circumstances. Unfortunately, there's no guarantee that your program material will always flow as seamlessly as you'd like.

I'd guess that there's really no problem, per se, but that your 'still frames' are the result of the player pausing as it locates the beginning of the loop on the disc. One thing that might help would be to create a longer video clip. With a 10-second loop, these pauses will be more noticeable, due to their frequency of appearance. Perhaps you could create a new, longer clip in Vegas by copying the clip several times on the timeline and then rendering it out. That way, the first n loops would be 'built into' the clip and you'd only see the still frames at the end of this longer clip.