I shoot with a Sony HDR-FX1 at 1080i. I have the ability to capture directly to Premiere Pro from my camera to SD at 480i. However I'm interested in editing at 720i and I'm not sure if it's possibe to capture my footage directly to 720i.
Will I need to first capture at 1080i and then downgrade my footage to 720i?
If so, can I do that with Premiere or will I need a 3rd party plug-in / software?
I'm curious why you would want to convert it to 720i anyway? This is not a standard format. Were you thinking of 720p? The only devices that would be able to play back a 720i image (to my knowledge) would be a computer and you would want your footage progressive if you planning on playing it back on a computer anyway.
You can deinterlace footage, but like Harm said, it's always better to shoot in the format you want to edit in. If you don't have a choice (the footage was given to you or you can't reshoot it), you can convert, but that takes render time and loses quality.
We have an HDV camera, but when I know our client will want the final product on a Standard Def DVD, we shoot in Standard Def, rather than shooting in HDV and down-converting. The image looks better and we save the time that down-converting would have taken.