Yes, it can be done. Choose DV NTSC 48K from the easy setup menu.
Then, as u said, turn off deck control (non-controllable device)
Now, S-Video only carries video. U need to run an audio signal into the converter as well. Does the camera have RCA audio out? It should.
Run A/V from the Hi8 to the converter. Then run Firewire from the converter to the mac. Have it setup b/4 u launch FCP. Launch Capture.
If this does not work, Run the Hi8 thru a DV Deck or DV Camera the same way.
If this does not work, dub the Hi8 footage to DV tape first then capture as usual.
Chris Tompkins
Video Atlanta