Puggo - Jar Jar's Yoda said:
Although the film is full of noise, grain, and scratches, it is very watchable on my 58" screen, in anamorphic widescreen. My first impressions are that it is considerably more enjoyable to watch on a large screen than the GOUT, despite the myriads of grain and blemishes..

That's great to hear. I'm a big fan of the original Puggo edition, and it sounds as if this is going to be a whole new level of retro splendid!

On the question of cropping, I wonder if this might not be the best approach:

(d) leave it and crop with a slightly curved border. I find this idea intriguing, and wonder what folks would think about it. I'm not entirely sure yet how I'd do it, but it seems like it should in theory be an easy solution. I could also pursue some sort of hybrid approach, like a feathered border.

Does Vegas allow you to create a gradiented (graded? gradaded...?) mask?

I think a slightly 'windowboxed' effect, with a soft vignetted edge around all four sides could be very effective method in masking those distortions, with the extra benefit of evoking that lovely 'projected' look.

I don't know Vegas very well at all, but we do have it running on some edit suites where I work, so I could have a poke around the masking options and get an idea of what's possible...