Best format for importing AVCHD (.mts) files?

After reading a lot of these archives and being a very new Mac user, I think I understand what I have to do here. I have an HD camcorder that records in .mts. I can either directly import from the camera to iMovie (which takes up far too much space) or I can convert the .mts to a different format that takes up lesser space while keeping the original files saved elsewhere.
What I haven't been able to figure out is, what format is going to be the most space efficient? While I would love to have super great HD quality, these are all home movies and primarily I want to be able to view them, edit/merge clips a little for storage, possibly burn to a DVD. Some quality lost in compression is ok with me. I have handbrake and converted to .mp4, but that still seemed to take up a lot of room...about 450 MB for maybe a 1-2 minute clip. There has got to be a better way, I would imagine, that would store better and also be acceptable to iMovie without translating into AIC codec (which I know takes a lot of room). Any thoughts? I am open to other third party conversion tools. I also can use Final Cut Pro if there is a compressed file FCP uses that will be smaller and better.
Thanks!!

So, I've been playing around with things. I used handbrake to convert the .m2ts into .m4v, and when I unclicked "optimize file", the file stayed at around 32 MB, and the original .m2ts was 27 MB. I also used a VoltaicHD trial to convert (it converted to .mov), and it was 107MB. The quality in iMovie was not too different to my eye, and it looks like the different is 1920x1080 vs 1440x816.
For home movie quality type stuff (and provided I keep original files in the event I ever want to use them), is the handbrake method going to be the smallest I can get? It seems pretty good to me, an extra few MB isn't a big deal...just not sure if I'm totally missing something here. It seems like the .m4v isn't being converted to the AIC, whereas the .mov is. Handbrake is a pain b/c it doesn't seem like I can click on multiple files at once to add to queue, but to save all that space it seems worth it. Tried MPEG streamclip and it doesn't convert .m2ts. Just want to make sure I'm not missing something, because that's a huge difference in storage space.

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