How to crop and deinterlace in Hybrid?

[Selur]

Do you have any advice to or settings I could use to improve the quality?

For the filtering, without seeing the source? No
For compression, without knowing which format you use: No

Does the bitrate has to be altered in any way?

Not if you aim for that bitrate.

So what video should I use if I use .avi as the container?

Don't really know why you would use .avi as container, but if you were to use .avi an you wanted:

My goal is to create lossless VHS capture that I can upload onto YouTube.

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Which I have done, captured it in HuffYUV.

Then you already got a lossless capture which you probably could upload to YouTube. (as long as your source < 256GB)
Deinterlacing will reduce the quality as will cropping and resizing, so you throw away the lossless part. Which is probably not a bad idea since it usually is advised to:
a. deinterlace interlaced content before uploading to YouTube (to make sure it's done properly)
b. upscale your content before uploading to YouTube (to get a bit of additional quality)

In general I would:
a. probably add tons of filtering before uploading VHS content to YouTube (denoise, degrain, deblocking, color corrections,...)
b. probably use x264 as video codec with a 1 pass quality encoding and a low crf (like 16).

Cu Selur