It's likely to be a messy mix, Beltane, and one likely rife with problems.
What do you know about the video from that iPhone? What format and resolution is it? What codec does it use? (There's a program called G Spot that will give you all of this information if you open your video in it -- though, when you Google it, be sure to include the word "codec" in your search or you'll get some web sites you didn't bargain for.)
It's possible you'll be able to convert that video into a usable format -- but you may also want to convert the AVCHD video into the same format before you start mixing them together in Premiere Elements.
I was hoping that wouldn't be the answer.
I had thought that Premiere Elements would be able to take all of the video my wife and I have taken of our daughter, variously with a Nikon D90, iPhone 3GS, and AVCHD camcorder, and allow me to edit the endless hours into one short watchable video. However, if I have to create separate projects for all of the formats, manually upscale or downscale each, and then create yet another project to combine the manually upscaled or downscaled video, then perhaps I need to look for another video editing program.
I'd have thought that I could simply pick project settings that matched the highest resolution format and then have Premiere upscale (or just put letter boxes around) the lower resolution video. Is this not possible?
Considering the playback of the AVCHD video without waiting for hours for the background rendering (with no effects applied at all) is worthless, perhaps I need to figure out how to get my money back from Adobe. (I have a system with Vista 64, Q6600, 8GB ram, 8800GT, and a 4 disk RAID 5 with around 180MB/s of performance. I'd have though that was sufficient, but it seems to not be.)
For what it's worth, these features are available in Final Cut -- which, unfortunately, is Mac only and costs considerably more.
Premiere Pro can do much of this. One can create a Sequence (think of this as a mini-Project) for each media type. However, there can still be issues, depending on the format/CODEC used. Like PrE, PrPro is built around an editing scheme based on DV-AVI Type II files. Still, by setting the Presets for each Sequence, one can do a lot more with mixed media.
The ultimate solution is to get a good conversion program. I use DigitalMedia Converter, and one of the nice features, besides the vast number of formats and CODEC's that it can work with, is that one can load it up with mixed media, and then output to DV-AVI Type II files w/ 48KHz 16-bit PCM/WAV Audio. You turn your back, and the conversion is done. The downside is that it's ~ US$50, but has worked beautifully for me. All of its converted files have always worked perfectly in PrE.
Client hand me all sorts of footage, and I have to get each Asset into a form that I can edit. This program does it for me. I liked it so much, that I bought three licenses for each of my computers.
This question aroused my curiosity and I tried mixing 1080i AVCHD and Nokia phone .3gp video on an 1080i AVCHD timeline in PE8 - the 3gp video played fine, the AVCHD video needed the timeline rendered to give a decent quality playback. I realise that's different from iPhone video, but I'm simply suggesting that it's worth trying, and that project presets don't necessarily mean that only the preset file type will work.
I have to say that this whole project settings thing is a mystery to me. Why does a 1080i AVCHD preset make a better job of playing back 3gp video from the timeline than it does playing back 1080i AVCHD? Weird. Why not just handle all that in the background (eg without asking the user for any settings at all, like one NLE here does, or simply setting the timeline to the first clip of the project (optionally) like another one here does?
As for the comment earlier on about background rendering - here (after a day or so) it seems to be not a very useful thing. Much grinding by the CPU for a very slow result. To get the timeline to play smoothly it's much quicker to position the work area bar as required and hit "enter". Also, one has to watch for the new analysis process, which once started seems to create an everlasting CPU intensive process even if you cancel it. You have to keep a sharp eye on the process manager and see what's consuming CPU cycles (if you don't know already) and kill any apparently rouge Adobe-related processes by hand. "Bmem" is your friend here, which is about the first thing I install on any PC of mine - badmofo.org/bmem is the site for this excellent freeware app.