My .mpg looks squished in VirtualDubMod and DGIndex

[counteragent.livejournal.com]

Source: mpg file
Desired outcome: VirtualDubMod displaying my mpg properly so that I can clip .avi files from it
Problem: VirtualDubMod is reading the file as 720X480 but it looks squished vertically (see below--yes, JPad should be EVEN WIDER than he is) 
I tried to open it in DGIndex and got the same squish.
I would love an avisynth scripting fix or (even better) a plug-in that works

 <--He should be EVEN WIDER

Any thoughts much appreciated.

Comments

[counteragent.livejournal.com]

Well, I'd much rather do that (less work, clipping and editing in same program, output at 720X480 without black bars, etc) but my issue is that Vegas 8.0 barfs on rendering movies with lots of .mpg clips. It's a noted bug that I encountered when creating Above and Below. There didn't seem to be a fix, just some sketchy work arounds...

So I was going to stick to .avi files for this vid if possible.