Sony Vegas Movie Studio 8 Memory Issues

I'm using the trial version of Sony Vegas Movie Studio (SVMS) Platinum (v 8.0d, Build 139). Importing media files (.m2t, high def from Canon HV-10) works fine, up to a point. Whenever I get to approximately 1.9GB virtual memory while importing files, the application throws a memory error while opening the media files (essentially, out of memory).

In SVMS, I notice the following by looking at Help > About > Computer tab:
Memory
Physical memory: 2,097.1 MB
Paging memory available: 4,194.3 MB
Virtual memory possible: 2,097.0 MB [seems to be the cause of the 1.9GB virtual memory error]

My main question is: Why is there a limit on "Virtual memory possible", and is that the cause of the above errors? Q: If I allocated 10GB to virtual memory, why doesn't Sony Vegas Movie Studio make use of it all, rather than bombing out.

On a somewhat related note:
I'm trial-testing SVMS because I'm fed up with the sucky disk thrashing and slow performance I experience with Abobe Premier Elements 4.
Q: Do the pro versions of these apps (Sony Vegas, Adobe Premier Pro) suffer from the same memory errors and low performance when editing HD video?
Q: Is there an easy way to edit with highly-compressed intermediate versions of my m2t files, then render the final project using the original m2t files?

Any advice is greatly appreciated.