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I would just add that I did 2 converts.
I too MTS movie and converted it using the Adobe media encoder into MPEG2 and H264 with the same settings.
The MPEG2 is actually less than halft size than the H264 and it is much more colser in quality and colors to the original.
How come ?
Quality and file size to a large degree depend on your settings, so I will not make any judgement on which is actually better for your purposes. The rest of your workflow is somewhat unclear. For compositing work, uncompressed formats are still the way to go, so a pre-convert to Quicktime is the best you can do. Outputting to H.264 in your case is slow, due to how AE treats these matters, which in part also explains your quality/ file size issue. In so many words: AE doesn't know dick about how a frame was compressed once it loads it into its buffers. Therefore any successive compression is always a full re-encode, which naturally can take some time for some formats. The logical thing to do would simply be to use other programs that transcode the streams directly, e.g. Premiere. Just not sure what you actually plan on doing with your clips. DVD? Web? Further editing?...
The plan is to edit some scene I shot.
Than create a full movie of those scenes.
I want it to keep the 720 HD quality.
So basicly to convert them to quicktime format?
That would be advisable, at least for the shots/ takes you intend to process in AE. Choose Animation, JPEG2000 or PNG as the CoDec and everything should be fine. Optionally, a good way to safe disk space while retaining maximum quality is to use LZW compressed TIFF sequences.