There've been lots of posts on here about the inability to edit AVCHD files so for those interested, thought I'd post that it can be done and I've done it.
The caveat is: apparently you need to have a Sony Vaio PC loaded with version 2.0 of Premier Elements or Pro and version 6.1 or better of a plug in called Vaio Edit Components. There was a reference to this in a post on here way back in October ("First Sony HDR-SR1 review online" thread) but the info apparently got overlooked. That poster indicated he wasn't able to install Vaio Edit Components on a non-Vaio computer.
I'm using a Vaio VGC-RC310G computer, Windows XP MCE, Adobe Premier Elements 2.0, Sony Vaio Edit Components 6.1. AVCHD files were downloaded to the PC with supplied camera software. From within Premier select Vaio Media from the Add Media menu. This pulls the AVCHD clips into the Premier project. Full editing capabilities are available. The finished project can be rendered and saved in any number of formats including HDV (which I successfully did last night), WMV and others. I haven't tried burning to DVD or AVCHD disk yet. The options are available through Premier's menus but then there's also DVD/AVCHD export selections under the Vaio Edit Components export menu. I looks like you might have to do it in 2 steps - first render and export the project in the proper format before you can burn it, but not sure yet.