Don,
You don't say in your post what NLE you are using, but I am assuming it is FCP.
Can't comment on FCP as I am Vegas Pro user, but in my workflow, I capture/copy the HDV files and then render out the video using either the MainConcept or the SONY AVC/AAC codec.
With either one, I end up with an MP4 file h.264 encode.
I am assuming that you can do something similar in FCP.
HTH,
Cheers for now,
Tom Pauncz
(30WEST MEDiA GROUP)