Hardware Upgrade Advice for HD editing and CS4

Dear friends,
I realize that there are many posts on hardware requirements, recommendations, etc... Perhaps this is my problem, there is too much info.
Here is my scenario and I would love some expert advice.
What I Have:
I have been editing my home movies since Premiere 6.5 and have been using CS3 for the past couple of years.
My current PC is an HP 9100t which has a ...
Quad Core 6600 2.4GHz processor
3GB RAM (max RAM is 8GB according to the stats for the motherboard)
500 GB System Drive
I recently added a 1.5 TB SATA Seagate Barracuda drive
Also have external 1TB WD connected via USB
Windows Vista Home Premium (32-Bit) OS
What I Just Got:
Recently purchased a Sony HDR-XR 500v and just love the HD picture quality. But now I want to edit the AVCHD files and thus upgrade to CS4
What I'd like to Know:
I'm tired of buying a new PC every couple of years, this machine is 16 months old and runs just fine.
Do you think I can upgrade the processor, add RAM and move to Windows 7 64-bit and happily edit my HD movies?
Or, do I need to once again try and convince my wife to let me buy a new PC
My Upgrade thoughts: I could Buy these items...
Intel Quad Core 9600 processor 2.8Ghz (the HP motherboard supports the Intel Yorkfield processors)
Max out the RAM at 8GB
Upgrade to Windows 7 Home Premium 64-Bit (I actually pre-ordered this for $49 a few weeks ago)
and of course upgrade to Premiere CS4
DO you think a few hundred dollars spent on upgrades will extend my editing life for another year or two?
Thanks so much!
Paul

but I was surprised to see you comment that it's pointless to upconvert video before working on it.
It can easily be you misunderstood my intention. It is somewhat like people often thinking that converting from a compressed format to a lossless format will restore the original quality. That is nonsense, because what has been thrown away during compression, can never be regained by uncompressing. That is an expectation similar to orange juice being uncompressed will restore the original oranges.
My intention with my remark was to emphasize that going from 4:2:0 to 4:2:2 will not restore original data or improve the image, only increase storage requirements.
But clearly that is not what you meant. You are talking about chroma keying and similar being best done on 4:2:2 or even better on 4:4:4 material. You are completely correct, but keep in mind, and that is what I tried to convey, is that starting out from 4:2:0 and upconverting to 4:2:2 or 4:4:4 will not restore original quality, it will still be (slightly less than) the 4:2:0 quality, because of the rounding errors in the algorithms. You will increase storage space significantly by this upconverting, but if you want to do any chroma keying, the quality of the keys will be significantly better than when performed on 4:2:0 material and the loss when again converting to 4:2:0 for final delivery will be significantly less than had you used chroma keys on 4:2:0 material.
I hope this explains it somewhat.

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