Best way to convert home movie VHS tapes so they can be edited in iMovie HD

Please help! I'm sorry this question is going to be long, but I'm a novice at this.
My goal is to get my VHS home movies (I have about 30 of them) into iMovie so I can do two things.
First I want to burn DVD's so I'll have a copy of the VHS tapes before they go bad.
Secondly, I want to be able to extract small clips from all of the tapes and combine them in a new iMovie project.
Here's what I've done so far:
I purchased a Canopus ADVC110 and got someof my VHS tapes converted digitally but the file sizes were HUGE and eating up my hard drive space. I was down to 6 GB of space left on my hard drive and almost crashed my Mac.
I deleted all these huge files and got my Mac back up to having 111 gigs of space left. Whew!
This week I purchased a Pinnacle converter and started all over. I took a VHS tape, and it was compressed into a nice small Mpeg-4 file and went to iTunes.
Then I tried to drag and drop it from itunes to imovie. That didn't work. I then dragged the movie to my desktop and then dragged it to imovie..... looks like this was going to take a long time to get into imovie. I'm thinking this is too many steps.
Now I am importing the file into iMovie by importing directly from itunes. The file size is 1.04 GB and it is 1 hour and 54 minutes long. It is taking a loooong time to import this movie....like 100 minutes.
I am afraid I am doing this the hard way.
Plus, after reading all the discussion boards and all the problems people are having... I don't even know if I'll be able to successfully edit this movie once it's imported. Plus, after I've edited it (if I can) will I be able to transfer the clips to another iMovie project?
I'm happy with the file size that the Pinnacle converter is giving me. I'm happy with the way the movie appears in itunes.
Because I have **so many VHS tapes** to convert, I'm asking you all if there is an easier way for me to complete this task!
Thanks in advance for any advise. Keep in mind that I'm not tech-sophisticated..... just a middle aged Grandma trying to preserve memories of my family!

_Share" the highlight as suggested_
Thanks Lennart..... I'm not sure I know what you meant by the above.
Do you mean that I share the little clips I want to use in the 'best of project'?
I read the MacWorld article.... it's great thanks!
I want to keep all these converted movies on my hard drive because down the road I want to extract other clips from them so I can make a 'best of' movie for my other family members. I may want to do that next year.... or whatever..... so I want to have the imovies available for me when that time comes.
In order to do this am I going to have to buy a lot..... and I mean ALOT of extra hard drive space? That darn Canopus was really making files for me that were like 60-80GB's per one half hour movie!!
Hey, I really appreciate all the time you are spending with me on this topic. Making these imovie memories are so very important to me.

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