Douglas – many many many thanks for that advise. I have just now had a chance to play with Vegas a little more. I loaded an mts (or m2ts) file into vegas, rendered as mxf, then loaded the mxf file to clip bits of it off.
For video clips that dont require HD quality, would you recommend rendering it as AVI or MPG? I put 1minute 21seconds of mts into an mxf (to edit split and trim), then made it into an AVI. From mxf to avi the file size went from 315mb to 294mb only.