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In my opinion, if you want to edit with Premiere Elements, you want to get an HDV, tape-based camcorder. Most any will work, although the Canon HV20 and HV40 are very popular and produce excellent results. (The HV30 has some problems.)
You definitely have more than enough power, even with 2 gigs of RAM, to do this. But, with Vista 32-bit, you can use as much as 4. With a quad-core processor, that's up to you. You'll know after you test drive.
The challenge with Premiere Elements is that it edits AVCHD natively -- as opposed to, say, Apple's Final Cut, which uses a proxy (sort of a lower resolution preview clip) for editing, then uses your native files for final output. This means AVCHD in Premiere Elements puts a tremendous strain on present technology.
With your rig, you can probably still handle it. But, in my opinion, you're better with having power to spare than working at the edge of your computer's capacity.
Does that help?
I highly recommend a tape based camcorder if you want to have a really fun experience with Premiere Elements ;)
Some great information available here
Thanks for the reply and all the information! Yes, I think I will highly consider HDV over AVCHD.
Thanks for the link. I'm definitly taking the time to look through it!