How to create an "area of interest" polygon mask?

To create a mask, I'd suggest using Polygon from layer extents (vector - research tools) and Difference (vector - geoprocessing tools) with "use only selected features" option activated.

If you really want to "exports all of the unselected features to a donut shapefile", you could try Dissolve, but it's quite slow and you might end up with suboptimal results like tiny holes etc.

Creating on big polygon with polygon from layer extents tool and then cutting out the selected county should be much faster.

Thank you @underdark for your direction to this solution. The fTools function "Difference" was exactly the tool that accomplished the task. However, different from your suggestion, I did not have to 1st create the "Polygon from Layer Extents".

Instead, the solution was:

1. Load the data layer (counties)
2. Select the feature of interest (County A)
3. Use the Vector->Geoprocessing->Difference tool
4. Select the county layer as both inputs, "use selected features" checked OFF for Input Vector Layer, ON for Difference Layer.

This will give the layer with all features from the input included EXCEPT the selected feature(s). Thanks!

The Symmetrical Difference in QGIS 1.6 located in Vector>Geoprocessing Tools>Symmetrical Difference (standard core tools) should generate your mask from two input polygons...