why m2v files can't be re-edited in Vegas...
 

I encoded video file for distribution on BD using Sony MPEG template but Vegas will not let me to open it to re-edit. Is this some kind of Sony's compatibility joke???

Nope, and you can't open files destined for regular DVDs either. Licensing issue with Mpeg group. Why would you want to edit this file and then re-compress it anyway?

I don't know about "licensing issue" with mpeg group speculation since I can open mpg files encoded in standard def projects as well as vob files from SD DVD's (these are also from mpeg media group).
As for why I'd like to re-edit it...hmmmm I can give you 1001 reasons why, but the simplest would be that IF I don't have original HD mxf files and need to change something in the project one year later then I'd be able to use m2v HD encoded files.

Son of a gun.... I thought I had tried to do this before with SD DVD files and it didn't work. But I just tried it and it did. I'll give it a whirl with a blu-ray encode and see what happens...

I'm sorry I don't remember the details but there are some video files that can be successfully loaded in Vegas by dragging them onto the time line that won't load from the Explorer in Vegas. I haven't tried this with M2V files. I don't often need to reencode an MPEG file; it damages the video quality too much to do this.

I don't know this for a fact but I think it may have to do with the fact that m2v files are elementary streams and not program or transport streams. The way Vegas deals with video it may look for meta data in a program or transport stream such as MXF, mp4, mpg and so forth. M2v has no meta data and Sony doesn't seem to want to deal with such a naked format. I have had luck using a muxer to get the video back into Vegas. You can find a lot of free muxers out there and they do not harm the quality at all. They just wrap the video and audio back into a program or transport stream so Vegas can read it. I usually use Tsmuxer and mux into a m2t file for HD content. Note however that Vegas seems to be a bit picky on the audio format muxed into the m2t files. I have only been able to get mpeg2 and dolby audio to mux into a m2t file Vegas will recognize. Ironically I have not had any luck with PCM audio which I always thought was odd.