Premiere Elements doesn't work well with high-def MOVs, Patrick, no matter what project presets you use. In fact, the current versions of the program don't interface well at all with video from these lower-priced pocket cams and helmet cams.
You'll get the best results if you use a program like Super (which is free) or even better Quicktime Pro (which costs $29 but does some editing also) to convert your file to a more standard 720x480 DV-AVI and then edit that in Premiere Elements, per the FAQs to the right of this forum.
If I go that route, I'm assuming that I would lose video quality since I would be converting to a format that has a lower resolution. I would like to keep the videos in HD quality if possible.
After doing some more digging, I came across this post that provided additional presets for progressive video formats:
Using the preset for "AVCHD Full HD 1080p 30" I was able to directly import a 1080p file from my camcorder, edit it, and export it as a 1080p .mp4 file. I think this should do the trick and allow me to edit my videos without converting them first.
Is this the best way to do this, or would there still be some benefit to doing an external conversion first? Is there any drawback to selecting either AVCHD or HDV as the project format when the source files are not either of those formats? Things seem to be working correctly now, but I suppose I would like to understand what is actually going on to avoid future headaches.
As long as the "home made" Presets work, I cannot see a reason to go any other route.
However, I would first construct a test Project, and do everything that you can think of with it. Last thing that one would want would be to get to about 99%, and find that they could not Export/Share, or something else. The small test Project will let you know how everything works. When one hacks the Presets, they are kind of alone. Adobe will obviously not support them, and many users, will likely have no experience with them.
Good luck, and hopefully some of the PrPro CS5 Presets make their way into PrE 9. I'd love to see the Desktop Preset (allows one to adjust almost all attributes for a Project) show up, along with the DSLR Presets. Going back a bit, PrE introduced the VOB and AVCHD Presets, and they made their way into PrPro in the next couple of versions. One never knows what will be inherited from either and added into the other.
Let us know how the tests work,