Usually, you don't want to. It's good to have a full-resolution lossless copy of your video as a master copy so that you can just recompress that instead of re-exporting from Vegas every time you need a new format/resolution/codec/any combination of the above.
(Also, this lets you use other programs (like AVISynth) for postprocessing, which generally gives you more and better options than Vegas or whatever other NLE you choose to use.)
For how to recompress your master <s>you'll be wrapped around my finger</s> to something small enough to distribute on the Internet, start here:
http://www.animemusicvideos.org/guides/ ... intro.html
And don't forget to compress your audio. It'll save you a significant amount of space for what is usually very little signal degradation.
In fact, 750 MB seems a little small for a lossless 3.5-minute video...