What is a good workflow for producing High quality High definition Videos suitable for a final upload to the internet.
In video, there is no "I don't have disk space" or "I want to add compression to files to lower my disk space usage and caching".

You should record uncompressed, work uncompressed, and at the final stage export the uncompressed video to a suitable format for delivery.

Record your video.  Edit wherever you want (I suggest Vegas, because is the fastest on pc).  Cut.  Edit.  Do whatever you want.  Then export your timeline to h.264.

I suggest using Adobe media encoder cs5 + to do the job.  Don't encode already encoded video files, because it will degrade your quality.

Check youtube/vimeo/... what formats they play the best (usually there is a guide for file formats and upload)

One more thing:  FRAPS ENCODES in its own codec.  You need a properly installed DECODER/ENCODER for Vegas/Avid/Premiere to see the files properly.

I did a lot of gaming videos before and after HD was introduced.  I did it with FRAPS, game engines....  Uncompressed is what you want.  Or you could force FRAPS to use Avid's DNxHD code c(you can get it on Avid's site.)