29.97p is not one of the formats for Blu-ray shown at this site:

http://en.wikipedia.org/wiki/Blu-ray_Disc

Vegas can output many formats that are not compatible with the Blu-ray standard.

I suggest you render your 29.97p as 59.94i. The content will be identical but be Blu-ray compatible. (Note that some people refer to 59.94i as 29.97i.)

But I don't want my nice clean progressive image desecrated with interlacing! Aren't most commercial DVDs progressive? Are all of them only 24p then?

As a long time interlace hater, it blows my mind if blueray can't handle 30p.

Just think about what is happening if you do what I said! If you display it on a progressive TV it will look exactly the same. It will be 30 fps progressive because that is what the source is. There will not be a series of fields taken 1/60 of a second apart as in true interlaced video but pairs of matching fields making up a complete frame taken 1/30 of a second apart.

By the way, interlaced is not all bad. With fast action you will get smoother viewing (less jitter). With slow action, however, progressive will be sharper.

And to answer your questions, full HD 1920x1080 movies will be 24p converted to 60i by a process known as pulldown. 1280x720x60p (59.94 actually) is supported however.

But I don't see how video that is drawn to the screen as interlaced will look the same as progressive. The image will look the same for 1/60 second, but for 1/60 it will have half of the previous frame (odd scan lines) mixed with half of the new frame (even scan lines)!

Or does this happen differently on a progressive TV? If a progressive TV waits the full 1/30 second for both the even and odd lines to be updated before displaying... then it will look the same.... I never understood how a progressive display shows interlaced source.... just by blending the fields?

And no, as an editor, I've never liked interlaced video. I don't care if it looks smoother for fast motion.... I see the 'teeth' during motion and don't like it. Besides, why is interlaced still around? With the advent of flat screen progressive TVs, interlacing is no longer needed. Soon 60p will be mainstream and people can have fast smooth motion. Peter Jackson is filming the new Hobbit movies at 48fps. I say: about time! Why 24fps for movies is so desirable is still a mystery to me. The higher progressive framerate and higher resolution, the better. Please let interlaced die a complete death. It's too bad that BlueRay standards seem to demand it to stick around.

As Ned Kelly said before they hung him, "Such is life".