I am looking for suggestions as to what to do in the Rutland area first weekend in August.
It is for four active adults who like the outdoors, art, food, history and shopping.

Just curious as to why Rutland? It isn't exactly the Vermont you see in the postcards.
History-Mt. Independence in nearby Orwell, Fort Ticonderoga in Ticonderoga NY (take the ferry from Shoreham VT), Vermont Morgan Horse Museum in Middlebury, Henry Sheldon Museum (VT History) in Middlebury.
Shopping? Vermont is not really a shopping destination unless you are looking for local arts/crafts etc. The Vermont Made Outlet in Wallingford is nice. You should go to the Vermont Country Store in Weston (1/2 hour or so from Rutland). Lots of antique shops all over Vermont.
Food - Roots in Rutland. Cafe Provence in Brandon.

Brandon VT is having First Friday. We haven't been to this event but love Brandon. It's artsy and unique.

Plymouth Notch with the Calvin Coolidge state historic site is about 30 miles east of Rutland. It is a really charming place (it is sometimes called "Vermont's Brigadoon" because it is really a throw-back to another era) and has a small cheese factory, too. There is some kind of Homestead Day in Plymouth August 5
http://historicsites.vermont.gov/coo...lidgeTour.html

I agree that Brandon and the Cafe Provence would be another good place to try.

I would think about choosing somewhere other than Rutland.