It will create a .DV file format which is the native format of the D8 camcorder. The files will be large. You can use these files perfectly fine in iMovie to the best of my knowledge.
I do recall however moving to the older version of iMovie HD (6) for some reason. Sorry, I can't remember exactly why.
I think there was an issue with newer version of iMovie handling DV interlaced video frames. The concern was that it would automatically deinterlace the video throwing away half the lines. A quick Google search suggests that this is no longer a problem, but I'm not sure.
The important thing to keep in mind for the OP is that capturing DV video over Firewire is basically a binary data transfer in real time -- that is, you press "Play" on the camera and a stream of data appears on the Firewire port. iMovie (or whatever capture program you use) is basically just dumping this data to disk and wrapping it inside a QuickTime container. Meaning that codecs, bitrate, etc. are all chosen for you automatically. Of course, if you wanted to, you could transcode that data to something else later (h264, MPEG2, etc.) But by default, DV video is the codec that's chosen for you, because that's exactly what is coming out of the camera.
Have fun. I have a ton of tapes sitting around collecting dust, I should probably capture them too before they deteriorate too much...