I would use DVD-RW, or hang onto the DVD-R (not trash it) until after you're sure the project is good. More than once I've had to re-capture something, having erased the RW or trashed the R. Oops.
You'd actually want to crop everything 4x3 (DAR) or 3x2 (SAR 720x480) -- you change the aspect ratio by doing odd resize.
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Load up in Vegas, crop the picture....export the file....
Back in to MovieEdit, cut the chapters up or do what ever than use my trademark boarder adjustment of the video...Everything is cropped to look like PAL format...2% from Top & Bottom 5% Left & Right.
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Load it in VirtualDub, deinterlace it with Yadif, run some kind of NR, crop as you want it, and then save as lossless/uncompressed AVI. Can even cut into segments in VirtualDub.
Forget Vegas here, wrong tool. (It works, but is inferior for this task.) Only use if fancy editing with effects.
Web videos don't usually do chapters.
Save as web-ready video. Vegas full version has decent exporter on newest versions, for H.264 (MPEG-4) or FLV. At least I think it does (I use Premiere CS3/CS4 and
MainConcept Reference).
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cut that film for YouTube or online videos,
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You must use a progressive format, and the videos will be H.264, FLV, WMV or QT in most all cases. If you're not doing it, the machine online most certainly is. Some sites let you upload a video with no conversion (better quality!) if you encode it to proper specs.