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Try the Lagarith lossless video codec as the codec for your VGA captures.
MPEG4 is highly compressed and hard to edit on anything but a powerhouse computer. I'm talking 8 cores and double-digit GB of RAM. Indeo is old and inefficient, which also makes it hard to edit.
Lagarith will save time and serious amounts of hard disk space compared to uncompressed. It is not, however, as space-saving as MPEG4. If you don't have large amounts of storage space on your internal drives, I recommend getting a 500 GB+ external USB drive. Hard disk space is cheap these days - get more.
Flash as an export format is ubiquitous - 98% of the computers in existence can play Flash video from the web. Windows Media is also in wide use and can easily support a 1024x768 frame size.
Just be aware that encoding to Flash takes a long time unless you, again, have a very beefy computer. There are also issues with proper sizing of the Flash player - a self-contained .swf file can be resized by the audience and you run the risk of having your video look like junk if they size it too big. Embedding an .flv file in a .swf player as part of a web page is a better solution.
>Just be aware that encoding to Flash takes a long time
I actually get very fast results using V2F for my web upload conversions, faster than MPEG2 even.
On2 VP6 is better quality but slower.
V2F uses the VP6 codec.