I don't know much about Adobe Premiere elements. I imported a MPEG2 into Premiere and it was fine in the preview screen but when I put into the timeline, it changed to a different color like green and blue. I was just wondering if anyone else has had this problem or know if Mpeg2s don't work in Premiere.
The old PE1 did not handle MPEG files very well at all. The latest version PE7 handles them much better... but some folks still have some issues. Best bet is to convert your MPEGs to DV-AVI. See this FAQ on conversion: