From the Source Project export the part you want to copy, export it to DV-AVI from the Share Menu (Personal Computer). Import the clip into the Target Project.
Insanity is hereditary, you get it from your children
I think that this would be a good addition to Steve's FAQ sub-forum, as it does come up very often.
Some users wish to split larger Projects, and some want to combine smaller Projects, but the answer is the same, just as you outlined it.