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Are you referring to MPEG-2 encoded HDV format clips? If so I agree, PE4 is/was terrible at this. Especially when you had a large number of such clips. Using effects made the project very very unstable, but I would just slog through it saving often.
I have PE7 on order, and it will arrive next Tues. I just thought I would chime in and say I have had the same experience you have, on a rock solid system that far exceeds adobes specs. And yes I did do every optimization they suggested here on the boards and throughout their website and customer support.
PE4 was just unstable with HDV clips, period, if you did any significant work at all in it.
Early reports on PE7 are very encouraging, I assume most of the users are working in HDV, and so far it's been all very positive compared to PE4. I will know early next week, I have plenty of projects I can throw at it that kill PE4 fairly quickly.
I have worked with HDV MPEG2 and AVCHD clips in quite large projects with PE7 and it is stable and can handle large projects. But then again everyone's system is slightly different. I have tried it on a Quad Core with 4GB RAM and on an older dual core with 2GB RAM... both worked well.
One issue with PE4 is that with large projects the memory usage would increase until eventuallt PE4 shutdown, they have done a better job of memory management in PE7. The memory usage now does not keep on incresing forever... it levels out and is quite stable.
When you reference HDV MPEG-2, I'm assuming you're talking about High Definition and Mpeg-2.
My Sony camcorder will upload to Mpeg-2, but it's not High Definition, just straight digital video and audio.
Once my timeline get's large or many effects and transitions, I can hang or crash PE4 in a heartbeat with Mpeg-2. Convert the same Mpeg's to DV-AVI, and PE4 runs like a bandit.
I'm running a clean updated system, Quad-core, loads of memory, and large fast drives.
PE4 will not run clean with Mpeg-2 and I've thrown everything at it but the kitchen sink.
Funny thing is that Vegas, Cyberlink, and Windows Movie Maker have no problems with these Mpeg's on the same system, but PE4 acts real strange with the same files.
Could it be that Adobe just doesn't get it, or they just don't care...
I say this because if you call Adobe Support and mention any issue with Mpeg's, the next thing out of their mouth is convert to DV-AVI...
Yes, High Definition MPEG-2. However Adobe made some memory management mods to get AVCHD working, I would expect these to help out with standard MPEG2 as well.