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As Floh said, did you ever try to open it in Quicktime? If it runs in Quicktime, it should be editable in iMovie. CS3 is a story by itself.

Seems this is another Baden and Württemberg cooperation... (I was born in Nordbaden)
 
I'm thinking of upgrading the RAM to the max (16GB right?) in several months...I'm basically just trying to get the hang of things right now.

I'm also waiting for the 8GB memory bars to drop. :) Memory is very useful for editing, especially if you want to do more complicated things. But you can learn everything as it is now.

Apple says the maximum is 16GB, but it actually is 32GB. But you probably won't need that, 16 is fine. You have 4 memory banks, so if you buy 2x8, you can even leave your old ones in there and end up with 20, being able to possibly upgrade to 32 if needed in about 10 years. ;)

.mp4 files are H.264 MPEG-4 HE AAC

Yep, and there is the AAC I was afraid of. Before you recode everything:

importing time is a bit long and the CS3 is doing weird things like the time line becoming all red when I try to put the video in....maybe because its too big or too long? its about 2 hours of footage...

The time line becoming red simply means that the footage you imported is in a codec that can not be natively edited with Premiere. To play back everything smoothly (or sometimes play back at all), you will have to render the timeline. If you do so, you might even get your sound back, if it can principally be used in Premiere but has to be rendered. Before you do that: Shorten your clip in the timeline! :) If you render the complete 2 hours just to try things out, you will hate me later.

I have used Premiere some time ago, but I can not remember how you can render your timeline, you have to find that for yourself.
 
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