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First ensure that your Premiere Elements project is using a preset that matches your camcorder (In your case, AVCHD). That's vital!
Then share/computor/quicktime/h264 at 1280 x720, per this thead on Muvipix.com.
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As Steve mentioned, make sure you're project is using the right preset:
You should be using one of the four available under the AVCHD folder. - Full HD for 1920x1080 or HD for 1440x1080
When you "Share" are you choosing the Online YouTube option? If so, you should choose the option that most closely matches your source video.
But you may want to "share" to your PC first, then upload the file to youtube later. That way, you can check out the video for any problems that may have occured durring encoding, and see if the video came out the way you expected. Plus, you can also play around with the different codec's, settings, options, etc... (using a very short clip to minimize time between settings changes), till you find the settings that work to fit your preferences.
EDIT: If PrE8 won't upload to youtube, try saving your project at the point that you're ready to upload, close PrE8, reboot your computer, open your project & share to youtube. I've experienced the failure to upload to youtube on several occasions, & these steps have so far worked for me to get my video uploaded.
For sharing to youtube (I only upload 720p but this tip will work with 1080i), I generally followed the tips by ATR on this thread:
I render the output to H.264/MP4 from PRE8 using the "Share/Mobile Phone and Players/Apple iPod and iPhone, preset iPod and iPhone - High Quality" then manually upload the MP4 file to youtube
Prior to stumbling upon this thread, I was rendering my videos to mpeg 2 then transcoding them to H.264 with an MP4 container. Now I just render the H.264/MP4 directly from PRE8... no more transcoding. Note the tips on selecting the right profile otherwise you might not see the resolution option you want to render to.
Thanks very much for all the great responses. I did in fact have to go back and re-do it with the avchd pre-set, and when I did that at 1440x1080 h.264 and an mpeg file, I was able to get it to look right playing on my computer.
But I still am having problems properly uploading to youtube, as the h.264 files come out as .m2t files and youtube won't take them. The youtube sharing tool on PE8 gets 96% through and then encounters an error. I ran the m2t file through Moviemaker to publish on youtube (which turned it into a wmv file) and it looked much better, but still there was a black box around it on youtube, although a smaller one than before. Tried to save it as an mp4/ipod file, same thing. Tried to use quicktime at 1280x720 but it was very blurry. So I am still playing around with it but can't figure out how to get it up on the web looking like it looks on my computer.
fyi, this is how it looked on youtube, after changing the pre-set, saving it to my computer as mpeg with the h.264 codec. that produced an .m2t file which i published though moviemaker, which converted it to an wmv file.
You need to play with the sharing options so it generates an HD file (either MP4 or Quicktime - MOV) which has an HD resolution (720p or 1080i). After you generate the MP4 or MOV HD file in PRE8 you upload it directly without using MovieMaker nor PRE8. Go to youtube, log on under your account and press the "Upload" button. Then select the MP4 or MOV HD file you created with PRE8. Do not use the built in YouTube share option in either PRE8 or MovieMaker.
Here is an example of an HD file (720p) uploaded to YouTube: http://www.youtube.com/watch?v=vPU7qv_ligI
Note that the 720p option is enabled ("watch in HD") under the resolutions options.
There's nothing "wrong" with Sharing directly to youtube from PrE8. All of my HD video's were shared directly to youtube from PrE8. Once I figured out the workflow, I didn't have any more problems. Sure quality isn't the greatest, but then again, neither is the camera & quality of the raw video is only very marginally better than what I'm seeing on youtube. Here's the last one I uploaded: http://www.youtube.com/watch?v=l9tLMkGU4QQ which has the option for 720p & 1080p
Thanks -- finally got it. It seems that the m2t file and a hd wmv file I created from Pre8 did in fact upload correctly to youtube, directly from my computer, although for some reason youtube never showed that it had finished processing. It appeared that it was hung up, but it actually published. Anyway, those were 1080p resolution as you guys suggested, so thanks again.