I've used to import DVD videos (MPEG-2 video with AC3 audio, generally) on Premiere Pro with Snow Leopard with no problem, but have no luck on Lion ("unsupported compression format"). Lion comes with MPEG-2 support for the Quicktime X player, yet it seems that Premiere relies on the Quicktime 7 codecs, which don't support MPEG-2 on Lion. I did the Squared 5 solution
to put the old MPEG2 component back, but the videos still don't import correctly on Premiere. Only the "video" track appears and is a completely black still at 1fps. Only the video "length" is correct. If I import the audio demuxed, says that it don't recognize the format. The video plays fine on MPEG Streamclip, yet the last time I exported a MPEG-2 video from there in another compressed format to use in Premiere, the Premiere output video ended with the colors all wrong. Quicktime 7 plays the videos, but sans audio. It frustrates me a lot especially since I could import the very same videos directly in Premiere without problem with Snow Leopard.