Thanks John,
I have not yet seen the film myself; the owner mentions the scratches and was wondering if I could do anything. Cropping would be an option if they are near the edge. Will also try the additional video track you suggest.

It can be done, but it's timeconsuming. There are indeed clean up tools as well, depending on budget. International Image in Santa Monica used to do this, I'm sure they still do.
We've done some clean up like this using a variety of plugins, but it's painstaking, lots of cloning, but Boris Red can do an amazing job if you've got the time.

check this out -- they have lic it to someone now though i understand ...

http://www.compression.ru/video/old_film_recover/index_en.html

http://www.stoik.com/pictureman/index.html is where the above ended up i think .. it is cheap and i understand it works very well ..

there are also solutions for AE , combustion, shake, and fusion ..

To give you an idea of what could be done with Vegas 3 and some proprietary tools that I *think* are now available....
Before

After

Amazing . . ! G

S&W have a box called Archangel that can do amazing things to both scanned film and video. The cost of the unit is astronomic needless to say however one of our archvial bodies has one, available I guess on an hourly rate. Prime focus is material that doesn;t justify hand restoration, this thing weaves it's magic in realtime.
Other possibilities is wet gate telecines. These use a rather expensive liquid that has specific optical properries matched to the film emulsion. The problem isn't so much the scratch as the way it diffracts the light. Filling the scratch with the right fluid avoids this problem.
I also recall one of the telecine manufacturers claiming they used a technique where the light is sent through the emulsion at an oblique angle to dodge the scratches.
Once the film is scanned of course all that can be done is to replace the scratched part with something from the same frame or if the scratch is moving then from the same partof another frame. As has been said, with a lot of fiddling around this can be done in Vegas, I've had only limited success with very bad tram tracks on an old answer print.
Best place to start is before it becomes video, anything that can be done optically may help a lot. You also need to determine on whcih side of the print the scratches are. If they're in the base then this can be polished out. Scratches in the emulsion are much harder but I think even some polishing here helps. The scratch isn't just a valley, material is pushed up into mounds on the sides of the valley so getting rid of this or burnishing it back into the valley may help.
Anything that involves touching film though really needs to be done by experts.
All that said, why are the prints getting scratched in the first place?
If you don't have them already, you can get these sticky roller gadgets that the film runs over before it goes into the gate. The grit sticks to the rollers, simple and effective I'm told.
Bob.