I was just wondering if it is best to burn mpeg 2 in Vegas before putting it in DVD2 or is it better to insert an AVI and have DVD2 convert it? OR is either way the same result?
You have more control over the various rendering options if you render from Vegas rather than having DVDA render things. If you're not worried about this level of control, then either approach should work.
Render in Vegas. If you render in DVD-A, then EVERY time you prep a DVD, you will spend hours(possibly) re-rendering the video. If you can generate the DVD perfectly on the first try, then it's about equal, but if you need to re-prepare the DVD, then you will be happy you don't need to render the video all over again. Plus, as noted, Vegas has more control over the rendering.
Also, I disagree with putting the audio in the MPEG. Personally, I prefer to just render AC-3 from Vegas(Stereo or 5.1). Once again, you have more control. Also, rendering to MPEG, then decompressing in DVD-A and rendering again to AC-3 could result in quality loss from the double rendering as both MPEG audio and AC-3 are lossy compressions.