HDV is mpeg, not avi. Now, with that said, you can buy Cineform and capture as avi files, but they will take up more space than mpeg and you will not have the benefit of not recompressing the files if you do not add any fx to them (Vegas pro 8 only). If you are going to encode multiple generations of the files, it may be of benefit for you to utilize Cineform.
There is also a couple of programs by VASST that allow you to change the files to a different type and then switch them back before you encode. The benefit in this is that it allows for faster editing if you have a slow machine that is having difficulty editing HDV. There is Ultimate S Pro and Gearshift.
Hope that helps.
j razz