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Generally with PE the new versions will edit older version projects, but once having done so the project can no longer be opened in the older version. However, I would advise to complete the project in PE3 to avoid any potential problems.
The captured video itself, on the other hand, is a DV-AVI file. And that will work in any version of Premiere Elements and any PC-based video editor.
Paul and Steve -
First - thx for the blindingly quick response. This group is the best and most professional.
2. Thx for the warning about "you can't turn back" to PE3 once having moved the project into PE7.
I suppose I could simply copy the project via "save as" naming it "Project 2", then edit in PE7, while also retaining Project 1 in PE3.
Q: That said, are there any compelling or earth-shattering benefits to moving the project into PE7? Sounds like only a few still photo processing and YouTube feature upgrades.
If you are using PE3 and are happy then there is no real reason to move the project into PE7. Maybe wait until the trial comes out and see if it adds anything to your workflow.
It really is all about features.
My review offers a pretty thorough tour of the program and its new features. It's called "What's New In Version 7"