Can anyone elaborate on the functional characteristics of the Panasonic HDC-SD5 and the Sanyo SD-1000? Which camcorder provides the best overall video quality and ability to edit?

One big difference is the Panasonic SD5 is a 3CCD camcorder and Xacti HD-1000 has a single CMOS chip. You will get better color from the Panasonic. The onboard microphone on the Panasonic provides much better sound, although you really should have an external mic. The Panasonic uses the AVCHD codec, the Sanyo uses a slightly different MPEG-4 codec. Both codecs have widely available editing tools, although I've found it to be easier to edit the Sanyo files than AVCHD from a computer resource standpoint.

Something that's a bit more subjective - I think you'll find it easier to hold the Panasonic steady in a handheld mode because it weighs more than the Xacti.