I suppose my comment on vegas was vague... Vegas can do HDV, and maybe full HD, but the version that includes support for it costs a little more. If you're not concerned with that, you can get a good deal...
See here.
The version that handles HDV is closer to $500 I think.
As for festival submission.. Let me ask you this.. if you were going to submit something in HD, what media would you submit on? Regular DVDs aren't really meant for HD, and will only hold 15 minutes or something like that, but I'd guess most festivals at the moment aren't equipped to handle HD DVDs (in either format HDDVD or BluRay).. an HD burner is ridiculously overpriced at present, so that's out... I suppose you could send them a Hard drive, but again it comes to whether they are equipped to handle playback.
You safe bet, to be compatible with the most festivals is to submit in standard def, either on a dv tape or dvd -- as they dictate. Shooting in HD or HDV is great, but at the moment, there's not much you can do with the finished product at that resolution. The film we're working on now I am shooting in HDV. The plan is to keep it at that resolution all the way through the edit, and final coloring, and then render out a standard def master for dvds and festival submissions. whether it stays high def that longer or not remains to be seen, but the point is the final product, at least for now, will be standard def.