What type of camcorder is your video coming from and how did you get it into your computer? What project settings did you use when you set up your Premiere Elements project?
Also, is there a watermark over your video? If there is no watermark, then the program did not re-encode the video in any way. What you're seeing is exactly what you put into your computer.
The trial version of Premiere Elements prints a big, obvious watermark over any video it must render or re-encode.
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It's a Quicktime format 720p h264-encoded video from a Canon SD4000is camera. It was brought into the computer using the Canon CameraWindow program. I compared the original file and the output of Premiere Elements side by side in the Apple Quicktime player.
Yes, there is a watermark -- I was using the trial version to evaluate the output quality of the program before I spent $100 on it. Based on what you have said, it sounds like either the background of the watermark isn't transparent, or the resulting re-encoding degraded the colors and sharpness. That's a shame, because it makes it hard for me to fairly evaluate the software's output.
If there is normally no re-encoding, then that's reassuring. However, I am also interested in seeing the quality of video that has been scaled from 1080p to 720p. That would obviously have to be re-encoded. The question is whether the watermark or the encoding is the real problem with the output of the trial version.
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Given your material, PrE will re-Encode the material upon Export.
I also would use a player, like VLC Player (free) to judge the input and output side by side. QT Player is not the best player, even for H.264. One other thought is to look into either Lead's, or MainConcepts H.264 CODEC, as Apple's often has two problems, a gamma error (could well be what you see with the "duller colors"), and also OOS issues. Users that have encountered problems with the Apple H.264 have found that most problems clear up with either of the other H.264 CODEC's.
I would suggest that you look into QT Pro (US$29 upgrade/unlock), as it will allow the simple cuts that you propose.
Other options would be Sony Vegas, as I believe that it does "smart rendering," which is pass the existing material straight through, unless you add any overlay, or Effects. There are probably others out there.
Though the interface is not as easy as PrE, or Vegas, MPEGStreamclip also will do smart rendering, IIRC.
I agree with Bill. The nature of that camera's footage is such that EVERY video editing program is going to re-encode it. About the only difference will be based on how close that video matches the editor's native format.
Quicktime Pro would be your best solution. No other PC program that I'm aware of edits MP4s from a still camera natively, and all programs will need to assimilate and re-encode the video in order to work with it. (Needless to say, unlike the Canon D series, video from this still camera is not designed to be used as editable video.)
The Canon 7D also produces h264 output. And the SD4000is comes with basic editing software.
Have you tried the DSLR project presets for a project?
If your video is compatible with this preset, there will NOT be a red line above your clips when you add them to your project's timeline.
Also, I would recommend that, if you plan to edit in Premiere Elements, you don't use the camera's software to get the video into the computer. You should connect the camcorder to your computer via USB and put it on Play and then use Premiere Elements' Get Media/From Flip, AVCHD and Camera tool to download the video from the camera to the computer. This will ensure that the video comes into the program in its native state rather than being converted in some way by the software.
This method will enable you to test to see if the program and your camera's video are compatible. As I said, the program is designed to interface with Canon's upper end DSLRs. I can't guarantee that it will work with video produced by their pocket cameras. It may also be MP4s -- but it may not be of the same flavor of MP4s as the Canon D series produce.
Please let us know if your experiments are successful as it will help us answer future similar questions.