I've completed a video in vegas that is longer than 2 hours. It is roughly 2 hours and 10 minutes long. What do I have to do in DVD A 2, so that I can fit the entire video on a 4.7gb disc that has menu selection, background video and audio?
click on "Optimize" and it will do the rest. That will tell DVDA2 that you want to fit all the data on a DVD disc. It will do all of the re-encoding for you.
Best option would be to decide on your bitrate in Vegas and render an appropriately sized MPEG2 file from there. Use a bitrate calculator to determine the best bitrate (and then use one slightly slower in order to make room for menus, etc).
You should avoid brining an MPEG2 into DVDA and then having DVDA re-encode it -- it will take a long time and will reduce the quality. If you really want to let DVDA encode for you (using the Fit to Disc option in the Optimize window), then you're better off bringing in an AVI instead of an MPEG2.