I've never used scripts in Vegas. You'll have to ask the script's author...
FWIW it's clearly possible by editing the script, or getting the script to simply pull in the settings from VirtualDub - it's just not something I've ever done.
In VirtualDub itself it's trivial to change the codec. CTRL+P or Video>Compression, and pick whatever one you want.
It's all "AVI" - AVI is just a container format, which can hold anything from 1000MBps uncompressed, to 100Mbps Canopus HQ, to 0.2Mbps MPEG-4!