Panasonic Lumix cameras are known to have some compatiblity issues with third-party software because us some proprietary formatting on Panasonic's part.
For those cameras, I'd recommend staying with the editing software that comes with them. Otherwise, you're likely to have problems.
Crazy things is that it works great with Premiere Element 4 on PC.
It seems that the video file format I get from my panasonic is mjpeg with mono audio (hence the 8 bit). Any chance I am missing a codec on the mac ?
If that's the case, then installing the software that came with the cam will install it.
But it's also possible it just won't go, unfortunately.
Though my wife has a Lumix, I have to admit that she has not shot any video, and I have not tested with it. Also, I am on a PC, so different CODEC's may well be installed.
I agree with Steve that the Panasonic software should install the necessary CODEC's. That is the way that it should happen. Now, I know of two great MJPEG CODEC's, and they are listed in this ARTICLE, but I do not know if either/both are X-platform.
Now, PrE is pretty good with handling many types of Audio, and will usually Conform whatever to 32-bit, floating point, 16-bit (PCM/WAV on the PC, and ? on the Mac), but sometimes there can be problems. Often, the Conforming takes some time, and many users do not let it complete fully, before trying to edit the material. This ARTICLE will go into a bit more background. What will often happen is that one gets a truncated CFA file, if they do not allow the process to complete. That sounds like what you are getting, but allowing the process to complete might/might not fix things. Could be other issues? Wish that I knew more of the inner-workings on the Mac, but Steve G. uses a couple of those with PrE, so does know the particulars, and can help more in that respect.
Another workflow, that might be useful, would be to rip the Audio from the Lumix's files, and Import those, replacing the muxed Audio. I use Adobe Audition (not ported for the Mac yet, but it's coming), but other programs, like the free Audacity (might be PC-only?) can do it. Audio editing programs can handle a lot more types of Audio, than an NLE (Non Linear Editor) can. One would just do a Save As to 48KHz 16-bit (PCM/WAV on a PC), and place the resultant file on a free Audio Track, lining it up with the Video portion of the muxed file. In your case, you can Alt-click (Option-click on a Mac?) the muxed, truncated Audio Clip, and just Delete that, using the Audio file from the Audio-editor instead.
I would also suggest that one create a 2-channel (mono as stereo) in the Audio-editor.
If one has a 2-channel, but single stream file, they could use the Fill Right (or Fill Left), to get a mono as stereo file. In Audition, one would just edit in Multi-track Mode, and Copy/Paste the single channel stream to the second Track. This will result in having the same signal sent to both speakers on a computer, or home theater setup. Note: though 2-channel, the signal will NOT be true stereo, but mono as stereo - similar, but the sound will be different than true stereo.