How do I convert files from .mts to something recognizeable by iMovie?

I've been trying to convert .mts files saved on a hard drive (I don't have the original file structure from the camcorder) into into something readable by iMovie. I have tried all the available formats in Toast Titanium, but the converted files are always greyed out in iMovie when I try to import them.
This has been extremely frustrating, and has led me to wonder what Apple was thinking when they made iMovie so picky about what it will accept. I've looked on various forums, but haven't found any solutions to my proble, so any help here would be greatly appreciated.

Also, have a look at Voltaic here:
http://www.shedworx.com/voltaichd
Before purchasing my Intel MacBook Pro I used a much earlier version of Voltaic to convert my AVCHD footage into AIC (Apple Intermediate Codec) for use in iMovie '08. It was slow but worked very well.
iMovie '09 actually converts AVCHD clips into the AIC format when importing the MTS files from a camera or from a FULL camera archive. The full archive includes all the contents of the camera, including the clips index - as you've discovered. However, Voltaic only needs the clips, not the full camera contents.
John

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