Only things that are wrong and cause this slomo behaviour, are the CPU, the disk and the source material. Those three factors combined cause this lousy performance. Several solutions: Use other source material that is easier to edit, like DV, or get a real workstation with several 7200 disks and at least an i7. Probably not what you wanted to hear, but your system is way underpowered.
Thanks. I had an idea it was probably more my system resources than anything.
I'll be getting a Macbook Pro with these specs:
2.54Ghz Intel Core 2 Duo
Solid State drive
NVIDIA GeForce 9400M graphics
Depending what happens Wednesday with Apple's new product launch, those specs might be improved. This question is more for someone that might already have a similar setup: Should I see a great improvement with that kind of system? How much affect does 4GB to 8GB RAM have?
Realize that every notebook is a factor 8-10 times slower than an equally priced workstation. If you want to go slow, go this route. Apart from the cost, it still is an underpowered system.