MTS File Conversion for iMovie

Dear Apple Support Community,
I am struggling with movie file conversions, and getting the optimum results from such a process before starting my editing work in iMovie.
I have a Canon HD camcorder which records movies according to AVCHD standards. Before using iMovie, I need to convert the .MTS files to a format which is compatible with iMovie, and I have tried the following:
Copy the files from the SD card on to my HDD.
Using Toast 11 (Titanum), I have selected different profiles to convert the file to formats such as MOV, M4V, MP4 etc.
The converted files yields a size that does not match the original one i.e. a 300 MB file after being converted, is now either 791 MB, or 96 MB in this case.
When importing the converted file into iMovie, iMovie still wants to optimize the file for some reason (I believe using APPLE INTERMEDIATE CODEC resolves the optimization issue)
Import the files directly from the SD card into iMovie, provided I have not altered the original file structure i.e. when inserting the SD card, iMovie recognizes the SD card the same way it would for connecting the Camera.When I select the videos to be imported, iMovie does so without hassles, but the files again turn out to be bigger than the original file by a factor of between 2 and 3, depending on the original file.
What is the best way to convert files to preserve the quality as close as possible to the original?
Is it normal for coverted files to be larger than the original file after being converted (smaller makes sense, but bigger just baffles me)
Thanks for any feedback!

Thanks for the great feedback.
I do have struggles though in general, part of which originates from my camera itself.
My camera still has a tendency to record an interlaced effect even though my settings are confidently selected to progressive (I have 50i and 25p to choose from - 25p is my selection).
However, when I use Toast Titanium, I have an option to select the source video to be deinterlaced, but Toast does not do a good job at deinterlacing, compared to Handbrake. The benefit of my Toast Preset is that I can covert the video to an Apple Intermediate Codec, which means that when the files are imported into iMovie, the process is rather quick.
When I convert using Handbrake, the software does a pretty **** good job at deinterlaing, but the downside is that I cannot find a preset that makes import into iMovie satisfactory.
So, in light of all this long discussion I gave, my question is really, what is the best file converter for iMovie to convert MTS files that need to be deinterlaced.
Thanks for any help!
Adios

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