It's funny how a whole lot of people manage video editing on old systems which are easily out-performed by an entry-level MBA, yet somehow the MBA is said to be unsuited to the task, or capable only of pretty simple projects of this kind.
Like all systems, the 11" MBA has its limitations, but it is actually a perfectly capable computer. It outperforms many Macs which were current models in 2009 when the last edition of iMovie was released, so at that level it is clearly more than capable. Whether it is well suited is a matter of exactly what kind of projects and your preferred workflow, since 2Gb RAM is a bit limiting in what it can run concurrently, and the 11" screen isn't exactly a luxurious amount of real estate to work with.
However, I routinely use mine for video work in the field - and indeed bought it for its supreme portability - and it does the job perfectly well. A MBP would be better in terms of absolute power and RAM, but is hardly necessary for video work.