I think you’re on the right track with tapeless and MPEG-2 but I don’t know what a MOD file is or how much trouble it’s going to give you. I would steer clear of any proprietary format or any format that needs special conversion software and get a camera that shoots good ‘ole MPG files that you can drag and drop right into Vegas Movie Studio. My Sony HDR-CX12 shoots regular MPEG2 files (as well as AVCHD) and it’s great for when my son is just playing around because MPEG is so light-weight with respect to computer power needed to edit it.
~jr
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