You can downrez to DV AVI type2 (SD). Your mini Mac should be able to handle that. It can't handle AVCHD, it is too much underpowered.
I figured out a solution and figured I'd post it for future reference should someone else have the same problem.
What I realized was that I needed to transcode my content from AVCHD (which was too demanding for my Mini inside of Encore - other apps can play it fine for the record) into a native codec that wouldn't be as demanding? My solution - MPEG-2. Transcoding into MPEG-2 at 30 Mbps allowed me to preserve most of the original quality (some was lost, but when you're starting with 17 Mbps H.264 allowing for 30 Mbps MPEG-2 seemed about right) while editing the file inside of Premiere Pro without difficulty. The other bonus is that the in the process of transcoding I could remove the 3:2 pulldown inserted by the camera.
Thanks for posting. That workflow is likely to help others in the future.