I have a 2008 iMac. Can iPhoto and iMovie process 720p HD videos?

I am shopping for a megazoom camera. They are mostly built for still photos, but also shoot HD videos.. in either 720p or 1080p formats. I have a 2008 iMac. I have not upgraded to Snow Leopard or a more recent version of iLIfe.
Can my version of iPhoto and iMovie process either format of HD?
A guy at the local Apple store said the video files have to be in AVCHD format, but I have found no info to back this up, so he is probably wrong.
A Canon online rep said 720p could be used, because my mac uses a 1080i format. ?? Something about up-sourcing.
I am eager to buy a camera, but want to be VERY sure I can use at least a 720p HD format.
As I am a computer neophyte, please explain in layman's terms.
Thanks very much!

iMovie from '08 iMac.. which makes the iMovie # 7.0
Thanks for the advice! I just found this: http://docs.info.apple.com/article.html?path=iMovie/7.0/en/15202.html.
As far as I can tell it says 1080i will work with iMovie 7.0, But I could be wrong.
I think your advice on using 720p is excellent. The camera I am most inclined to buy at the moment is the Panasonic Lumix FZ-100. I think it has optional .. what do I call them.. resolutions? Possibility of shooting in either 720p or 1080i... or maybe not.
A rather rude apple tech support guy I spoke with yesterday.. if I remember correctly, said 720p or 1080i or 1080p.. wouldn't matter.. for '08 imoive.. but this might not be correct. Besides being unpleasant, he didn't explain things very well..
He also said it is best to find a camera that shoots in AVCHD, and that if I didn't find one, I would have to convert the video file to AVCHD.. I am wondering how to do that, and I am wondering if he is correct.
You have a Canon.. I got an email from a Canon rep who says none of the Canon cameras shoots in AVCHD.. maybe this is not a problem? Do you have to convert your video files to AVCHD?
And.. If I have been shooting in 1080i..or 1080p for that matter, if I understand you correctly, I can process that video in 720p instead? I don't know if there is an option for this in iMovie '08 (which is version 7.. GRRRR.)
This is all too @#$% complicated! I've been doing research for almost a week.. many hours a day.. trying to figure out what camera to buy, and whether or not it is compatible with my mac. I thought I had it figured out.. but maybe not..
If I need to, I'll get the iLife '09.. but have been reading bad reviews of iLife '11, so probably won't get that one.
Besides the Pan. Lumix, I am checking out the Canon SX20 and SX30.. both shoot in 720p.. I think.. If I can convert these to AVCHD easily (or if I don't have to convert them) maybe the Canons are a better choice.
Lastly.. will these videos process with iPhoto? Mostly I just want to put videos on youtube without any fancy editing. I've been doing this with an older but excellent point and shoot Canon (that does not shoot videos in HD), and have had no problems uploading to youtube.
Thanks VERY much for the help!

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