I would recommend you simply duplicate the good frame prior to the bad frame (and replace the bad frame with it)... it is a lot easier than messing with fades/etc.

Set preview monitor to Best/Full and capture the still... then load that back on the timeline on a track above the bad frame.

I can't imagine what Vegas would make of a cross-fade over a period of just 1 frame. My brain hurts just trying to think of it.

So this is fun...

again, scrolling the cursor over the selection produces no bad frames (i even took out the 3-frame crossfade, just to check that the 'before' frame was OK). Building a dynamic RAM preview also produces no bad frame. However, Selectively prerendering video: the bad frame gets back in there! What the hell?

I think you have definitely found a minor glitch.

However, you need to get on with your project, so I would recommend not trying to punish yourself by continuing with your current approach.

Instead, let's review what you are trying to do: You want to replace a bad frame without simply deleting it, because this would glitch the audio. I think you are trying to "sythesize" a new frame by blending the two frames on either side of the bad frame. The problem is that a one-frame fade doesn't really have any definition, that is to say, a frame is a discrete entity that exists for (approx.) 1/30 of a second. You can't fade it over time (unless the software faded each scanline compared to the previous line, but that would look really weird).

One good approach -- which I have used myself, and which has already been suggested -- is to merely repeat either of the good, adjacent frames. This is a simple cut/paste operation and is what I would recommend. No need for velocity envelopes, etc. BTW, I don't recommend capturing the frame as a snapshot. Instead, you can simply select one frame and copy it, then paste it. Still image capture has issues of what the preview resolution is set to, or what aspect ratio is used, or whether the result is interlaced or progressive. Thus, there is no reason to use a still image capture in this case.

Another approach, if you are really set on creating a new frame, is to cut the bad frame, leaving a hole. Copy the previous frame and paste it into that space. Then, create a track above and copy the following frame into the new track, directly above the position where the bad frame resided. This leaves you with both the previous and the following frame in the same time slot where the bad frame resided. Finally, drag the opacity for the frame on the upper track to 50%. This will give you the 50/50 blend of the previous and following frame, which is what I think you were originally trying to achieve.

Hmmm....I'm wondering if you're getting stuck on a preview file address. What happens if you render that small section to a new track, giving it a unique name?

so... everyone had great suggestions.
let's call the bad frame "frame2, the previous frame "frame1", and the frame after the bad frame "frame3". This is all according to how things look in the preview.

When I would duplicate frame1 and replace frame2 with frame1, it would look fine in the preview, but glitch on disk render. When I duplicate frame3, and replace frame2, it looks fine in preview, then renders with bad frame in it.

When I duplicated frame2 and replaced frame1, it looked bad in preview, then rendered without the bad frame.

So it would seem that this is a minor glitch. Would it be safe to say that in that the timeline preview, Vegas references files slightly differently than while it is rendering?

Do you have Quantize turned on? It definitely needs to be on for this type of single frame editing. If it is off, once you turn it on, you'll need to go to the critical editing points and "re-snap" each edge so that each lines up on the frame boundaries.