Thanks for the suggestions. You're right, I was trying to get this off my plate as quickly as possible, and I acknowledge that my machine was not optimized for the process (older laptop, internal drive and pressed for free disk space -- in fact I spent an hour offloading files from my HD onto my NAS in order to make room for the editing I was about to do).
Sounds like my solutions are:
(a) Use Toast
(b) Use Adobe Premiere
I notice that neither solution uses Apple-native solutions. Both solutions will involve spending money on software (granted Toast isn't that expensive). "Upgrade to a faster machine" is also implicit. This is what I think is kind of sad. I won't post my entire "why I switched to Mac" story here, but the gist of it was that, at the time, I was struggling to edit DV video with my top-of-the-line, spec'ed out Dell workstation laptop running pro NLE software, but my friend had a several-years-older Titanium PowerBook G4 that ran circles around my machine. He imported, edited, did full-screen preview playback, etc. without rendering (well, iMovie was doing background transition rendering) and without skipping frames like my Windows machine did. All using the FREE built-in iLife software. That impressed me so much that I bought my own PowerBook a few months later. It's not that his machine was faster (in fact, I'm certain it wasn't) but Apple tuned their software just so using techniques like background rendering to make it feel faster.
I want to point out here that I'm not a pro (though I dabbled with semi-pro projects for a while). I don't really want to set up an editing workstation. I'm just an average guy with a Mac laptop trying to make a DVD of a concert he recorded on an HD camera. Sounds like the kind of typical common task that Apple used to make really easy and elegant.
I wish AVCHD was a native edit option in Final Cut and iMovie too, but Apple does at least have a reason for not offering it that you might not be aware of. It is a highly-compressed codec, Long-GOP meaning that not every frame of video is a full frame, so the system is CONSTANTLY having to calculate frames, even just to play the video back on your screen. It is VERY CPU-intensive to work with these codecs, especially to edit them and render them natively! You think your machine feels slow now? Try editing native Long-GOP H.264! Heck, even editing Long-GOP MPEG-2 is a ROYAL PITA, and that's a significantly less processor-intensive codec to work with than H.264. Apple forcing you to transcode to an all I-frame codec like AIC (or ProRes in Final Cut) is really not that bad a solution. Hopefully the new Final Cut will make that transcoding process MUCH faster. ANd maybe allow native editing as well, we'll see.