I am planning to make short movies using my sony dcr trv 265e. (This is a single CCD PAL camera). This doesn't have an external microphone. I intend to use an external mic directly connected to my computer's audio card.
I intend to record the video directly on to the harddisk. Will the quality of video be sufficient?
Sure I used a SVHS and Hi-8 in a Targa System for years before DV caught on. you will need a way to get the Analog video into the computer. Unless you have a media center PC you probly need to add some kind of AV Digitizer Device.
I have not worked with Hi8 in a long time so I will not attemp to suggest a particular device but Im sure one of the videoguys here have the current best solution in mind. (For hi8 do not spend more then $200) for a device. As for editing software start with Windows movie maker or whatever comes with the AV digitizer device.
The bottom line is while fancy cameras will get you more quality the biggest factor is proper lighting and sound so focus on that and have fun.