You use the equipment you can get.
It is much more important to actually
do something. My first video short was shot on VHSC, digitized via analog capture card at half-resolution, and cropped to widescreen.
I looked up the interlacing problem and I believe it could call be fixed with the editing equipment.
Yep. Every video editing program that I know of supports deinterlacing. Alternatively, you could just keep it at 60i for the full 60fps look. Either way, you need to tell your editing program that the footage you're working with is interlaced so it knows how to display/edit it properly.
WHat did you mean by choose DV 16:9 (non-square pixels) for 720x480 widescreen. Is this a question the software asks when using it?
Yes, it should be. I'll do my best to explain this. This is a bit over-simplified, but is correct enough for practical use:
Okay, so back before widescreen televisions a regular TV was a little wider than its height. The ratio was 4/3, meaning if the TV was four feet wide, it would be three feet tall. (That would be a huge TV, but it illustrates the point nicely.)
The number of vertical pixels making up this image is 480 (eg, 480 lines of resolution). If the pixels were exactly square, then you'd get 640 pixels across, eg. 640x480. But TVs didn't have square pixels. Oh no, that would be too easy. Instead, they crammed in some extra resolution by making the pixels skinny/tall, ending up with 720 pixels across.
What this meant is if you pulled your footage into your computer (which uses square pixels), the 720x480 image would look horizontally stretched a bit. To fix this, the editing program had to be told that the pixels for the image aren't square, but instead should be treated as NTSC/DV. This way the computer can correctly display the 720x480 image by rescaling its display on the screen to 4:3 proportions.
Does that make any sense?
Okay, so now on to widescreen. That video camere you've got there shoots widescreen video at 16x9 proportions, but then squeezes that image onto the 4:3 720x480 NTSC/DV format. If you just play it back in the computer everyone will look tall and skinny. So you have to tell your editing program that the image is a 16:9 "anamorphic" (eg. 'squeezed') source and it needs to be stretched back out to look correct. This is called NTSC/DV Anamorphic (or NTSC/DV 16:9 Anamorphic).
Your footage will not actually change -- it will still be 720x480 pixels in dimensions, but the editing program will jump through some hoops for you so it will look right on your screen.