I feel ripping VHS to DVD is counter productive and is so "last season". Clients are already ripping DVD's to single file movies. Since VHS is so bad , do I render to 1280x720 or 720x576 (PAL)? Would you be able to see the difference between HD 720p and DVD PAL? I think not.
At some point it will be uprezzed, either by the DVD player, or if you render to 1280 x 720 or just watching on a bigger screen.
At the distance I watch my DVDs in NTSC, they look fine playing at standard definition resolution. But to be compatible with Bluray or other HD players, I would probably capture my VHS's to HD if I was doing that. I have pretty much captured all of mine by now though at SD and I don't want to go through that again.
VHS is only about 300 horizontal lines of video data. That's only about 2/3 of the resolution of 480 line standard def video. Saving it as a high-def video won't give you a higher resolution file. You're still only going to be working with what is essentially a 400x300 pixel video.
I would tend to choose DVD as the destination based on the fact that DVD will be a "universal" storage format for many years to come. VHS playback is mechanical and fussy and players are going to be harder to find, and file-based storage brings up the question of encoding format.
VHS is a tape format of 4:3 frame - in other words SD -even if the movie recorded on it has a widescreen proportion. A good capture of good VHS will produce an acceptable SD frame. Place the SD frame inside of 75% of the area of coverage of an HDV 16:9 frame _ this is a practice of American broadcasting going over HD. Export the HDV 1440 x1080 project format to a Blu-ray standard - burn in DVDAPro on Blu-ray single layer discs. DONE