How to down convert iMovie HD imported in Full 1920x1080 to Large 960x540

I have a Canon HD camcorder which captures video in 1080i format. I have been downloading my movies in iMovie using the Full - 1920x1080 option instead of the Large - 960x540 option.
But now I am running out of space!!! Also I don't see a big difference in quality between the two formats.
I want to down convert all my downloaded movies to Large - 960x540 format ... Can someone tell me how to do that in iMovie. I have already deleted the movies in my camcorder. Help!

I don't think that what you're trying to do is possible without reimporting the footage, which I understand is deleted. You can down convert to 540 on export without a problem from 1080, but you original footage will remain 1080.
The good news is external HDs are really cheap these days, so you can pick one up to store your footage with a very minor investment. Now you can switch to importing 540 as Apple recommends and you'll save a ton of space, and processing time, moving forward. As you've already seen, the quality difference is very minimal versus the space and processing cost.

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