AVCHD Disappointed with FCE

I am having mixed information regarding Final Cut Express' support of AVCHD. If I understand correctly, ingesting video (from a Sony SR-12 AVCHD 1920x1080i) creates a "wrapper" using AIC since FCE can't edit the AVCHD files directly (that wrapper is supposed to retain quality-I thought). When I edit and export my footage using Quicktime (not conversion), and import into iDVD it looks bad -- blurry. It looks bad no matter what I do with it (excluding the interlacing of course).
I'm doing editing with a friend and he called Apple Support and they said that it's FCE's lack of proper AVCHD support that is causing the issue. What? I thought FCE 4 "supported" AVCHD??
I just purchased (and learned) FCE and don't want to have to switch to Premiere (if that even helps). I checked elsewhere and other people suggest using Sony Vegas to ingest/capture footage from a Sony camera (yeah, that doesn't work on a Mac and I don't want to have to go back to a PC just to edit video).
Does anyone else have these issues? I tried to find answers on the forums (and they are probably here but I am not seeing what I need)...
I previously posted regarding the quality issue, and people suggested video conversion programs such as Voltaic (or even iSkySoft), but when I try that, I don't see a setting that looks good or that FCE will accept without re-encoding.
I am going to take the camera to a friend's house tomorrow for him to test it out with Sony Vegas. I just figured I would post another message here in the discussion groups to see if anyone else has any thoughts.
Thanks.

I think we've gone through this and it's been discussed on the forum on various places pretty but I'd just like to comment on a few misconceptions.
The ingested material is not placed in a wrapper. The original material is in a wrapper that includes metadata in addition to the video and audio. The media is converted to a QuickTime file using the Apple Intermediate Codec.
How are you looking at the exported file? On your computer? Is the QuickTime Pro player set to high quality output? If you are monitoring it correctly the quality is excellent. What happens in iDVD after that is a different question for a different forum. The quality is going to be substantially impacted by reducing it to standard definition.
< Edited by Host >

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