I was working on a 720p project yesterday and threw some SD footage shot on my DVX-100 onto the timeline. Unlike Vegas 6, the new version of Vegas appeared to upconvert the SD footage so that it filled the screen vertically (black bars on each side) and it actually looked really good (no pixelation).
Am I missing something here? Is this just an anomaly or did Sony do something to enhance SD footage in HD timelines in Vegas 7?