Hello all. I've been lurking around here today, and it looks like a great place to get some advice, so I hope some of you experienced people will read my post and give me some help. I'll be eternally grateful! I'm going to lay out what the project is, what my skills and equipment are, and then the questions I have.
Here's the deal... I'm a classical pianist and piano teacher. Over the years, I've made many videos of my playing with mixed results in terms of quality. Recently I published a whole piano method book, and I am planning to create a series of instructional videos to support it. My idea is that I'll make them available for purchase as downloads on my site as I produce them. When the whole series is complete I will want to also slap them all on a DVD which I will also sell.
My budget is extremely limited, and I am doing this as a do-it-yourself project. I just purchased a pocket HD camcorder (Sony Webbie). (In the past, I have borrowed cameras from friends.) I have a nice audio recording setup already (3 mics that I connect to a firewire interface and record directly to the computer. I am already skilled at swapping out the audio from the camera with the audio from my mics and syncing it up. I use Sony Vegas Movie Studio and SoundForge. I am also skilled at trimming clips, switching between them, crossfading, etc. My computer is running XP, has a Pentium 4 at 2.8gHz, 1GB RAM, and the video card is an Nvidia NV34 (GeForce FX 5200) with only 128MB memory
OK, so now the issues... I know that the Webbie camera records in a lossy format that isn't ideal for editing with, but it's all I can use. It records in mp4 format with H.264 compression. What I want to know from you guys is what should my workflow be in terms of file formats for input and rendering? I don't really think HD is important for the final product. I'm quite sure standard definition would be fine, though I do like the widescreen format (it's especially good for showing the whole piano keyboard from above). Also, I don't want the final filesize for the downloads to be too huge.
So, what I'm thinking is to record in 1080p HD format and WAV audio so I can get the maximum quality out of the equipment I have. Import all the files into Vegas. Edit to my heart's content. Then render the final product again as mp4 H.264 but with AAC audio. I think this is the most universal file format these days. However, I'd make the video size for my final renders more like 1024x576. I am thinking that since I am editing a lossy format source and then resaving into a lossy format, starting with 1920x1080 and than shrinking to 1024x576 in the final step will preserve as much quality as possible.
QUESTIONS:
1. Are my assumptions correct about lossiness, file formats, and picture dimensions?
2. Will my computer even be able to handle this? If not, can I get away with just buying a new video card?
3. Do you think my final product will be acceptable in that format and size both for viewing on a computer or on a tv screen?
4. Do you have any advice on the best settings to use when rendering the project files to get good quality with a reasonable file size?
5. I've had some confusion in the past over rectangular vs. square pixels. I don't want the image to look distorted. How can I avoid this? Are there input settings and output settings I need to be aware of so I don't screw this up? (Again, I want it to look right on the computer and also if outputted to a tv screen.)
6. Finally, should I render the files differently depending on whether they will be individual digital downloads, or tracks on a traditional DVD?
If you have read all this, I thank you thank you thank you! I know this is a tall order from someone who is completely new to the forum. But, like I said, if you are inclined to help me, I'll truly appreciate it. I'll even give you credit as an advisor on the project if you want, though I can't imagine it would do much for your career, lol. 
