Yipes, that's a tough one - getting into some real esoterica here...

Hardcore folks would do something like using AviSynth, which can use both VFW and DirectX codecs, to open the file and 'frameserve' it via a proxy to VirtualDub. I once did this myself to get a clip from a VOB file.

(Before some commercial videographer gets annoyed - I'm a hobbyist. We glom, sounds, clips, all the time in our home movies, never seen by anybody but Uncle Joe and Aunt Irene. Be flattered.)

I'd bet a silver dollar AviSynth can read m2t, since it uses the codecs already on your system, which is what vegas is doing.

Explaining AViSynth and frameserving, which still somewhat confusing to me, is a bit out of my range to explain concisely.

So, now Im using VirtualDub and the Deshaker plugin
 

I decide to pop my last post over to the effects forum, where it may now be more relevant.

Cheers!

Rob