VC1 Madness

Okay.
So I've read that blu-ray's VC-1 can be demuxed from m2ts and remuxed into a wmv file.
This method works. It takes a lot of steps and programs. But the quality is not degraded and you end up with the  exact same quality as the original working file.

However, during playback, it plays back in slow motion. A lot slower than the original file.

And in Sony Vegas, it doesn't update with the preview window fast enough to see your editing live.
You still have to select regions to render and preview. :/
I also notice the final video rendered from Sony Vegas also has a stuttering problem, as if the FPS was different. Overall, the audio is in synch, but the video looks like it's dropping frames at an annoying pace.

So, it looks like it's back to the drawing board.

So far there are three methods to work with:
1) use a lossless codec to convert the VC1 video to AVI, lossless to import into Sony Vegas (which renders nicely, but the live updates for the preview are bad; apporx. 2 seconds) (a lot of space is consumed)
2) create AVFS (Avi Virtual File System) to import into Sony Vegas (which renders nicely, but the live updates for the preview are bad; approx. 4-10 seconds). (AVFS allows you to use an AviSynth script to frameserve your VC1 video with a decoder like FFMS2, or simliar; FFMS2 is preferred and updates faster than other decoders via AviSynth). (no space is consumed)
3) Demux and Remux your VC1 elementary stream into a wma video to import into Sony Vegas (which renders poorly, but the live updates for the preview are bad; apporx. 2 seconds). (identical space to your original video is consumed)

Once I get around to playing with everything and researching a little more, I'll be able to do a better test with everything.

So far, it seems the Lossless codec is preferred for editing... If you got the space for it.