Unfortunately, you have posted into the Premiere forum. This is an older series of programs, prior to the introduction of the Premiere Pro line, with PrPro 1.0.
Now, for AVCHD material, CS4.1 offers full native support for this format with most of its variations. One DOES need a beefy computer to process this footage, as it is very heavily CPU-dependent.
I'll bet that Curt, or Jeff, will move your post to the PrPro sub-forum, so look for it there. You will get many more responses in that forum.
Looks as though I need to slow down and at least post to the right forum! Thank you; I do hope Curt or Jeff will move this; if not, I will re-post in the proper location. Thanks for your comments. I will look forward to some great resources from additional members.
CS3 does not support AVCHD CS4 does.
You can convert your files to high quality mpeg with Upshift from VASTT or to avi with NeoScene from Cineform.
What preset is best to use for project files?
CS4 has changed things a little bit. Instead of project settings, you get sequence settings. This allows multiple types of sequences in the same project.
That aside, you generally use presets that match your footage. CS4 comes with a multitude of AVCHD presets.