I have a Sanyo HD1000 camera that I use for outdoor footage and have struggled with working with the MP4 files in Vegas for the past several months. It is a bit frustrating as the playback from the camera to an HDTV is quite nice but after converting files and rendering them out, there is some quality loss that is noticeable. I'd love feedback on my process. After A LOT of trial and error, here is my workflow to use the MP4 files in project with other media (MTS files). I did file that if I have a mixed media project, that if I didn't create some kind of intermediate file, Vegas would crash frequently. I use a lot of slom motion and would get a horrible artifact in the final renders if the field settings were reversed for the files that came from the Sanyo MP4's.

Here is the flow:
Full HD (Sanyo) Conversion Template

(Taking full HD footage in MP4 format to a m2t file that is devoid of field interlace artifact)
1. In Sony Vegas, use the default HDV 1440x1080 template, UFF, Gaussian, blend, 1.33 pixel Ratio, quality- best. Place MP4's in the timeline

2. Render to m2t format with HDV 1080-60i template and make it UFF and full quality (31).
3. DO NOT change the velocity of the clips prior to conversion
4. Render the m2t file and use this file for the main project
5. If using slow motion in the clip, you will need to go into the clip properties and change if from Upper Field First to Lower Field First (for the m2t file to clear up an annoying video artifact (the original Sanyo files are LFF which creates a problem with the m2t file in slow motion)

Any feedback on this process? My main issue with it is that I lose some quality in the conversion that I can't seem to clear up.

Mike