Also, with Premiere Elements, you must match your project preset to the camcorder. If you do, the quality will be every bit as good coming out of the program as it is going in.
But, as John says, it takes very powerful program to edit AVCHD.
If all you're looking to do is shoot video and post it to YouTube, you may want to invest in a pocket Flip camcorder (which comes with a basic editor) and leave Premiere Elements out of the equation altogether.
To re-enforce the statements by John T, and Steve, many feel that a fast Quad-core is the minimum for AVCHD. Other feel that a fast i7 is the minimum.
What are the full specs. of your computer? AVCHD takes a lot of power, just to playback, much less edit smoothly.
I'd almost think that Intel was behind AVCHD, as it has probably sold more big i7's, that anything else could have.