Which MPEG4 flavours are compatible with iMovie 08?

Hi there!
I just tried out iMovie 08 and I like it quite a lot. But there is a problem with my videos, which seem to be incompatible. I record video with an Casio Exilim EX-S500 camera which produces in an Avi-container with tracks in this format:
1. Video: M4S2 aka MS MPEG-4
2. Audio: DVI ADPCM
Ok, I found out that the sound format is kind of problematic, but I don't know what's the matter with the video stream. MPEG-4 should work. There is nowhere a list to be found exactly stating the video formats iMovie 08 likes. It would be nice to use my videos as they are, but if conversion cannot be avoided (arg!), I would like to know a good target format.
*Which format*
*a) works fluidly with iMovie 08 (skimming etc.) and*
*b) preserves the visual quality of my movies without exploding file size?*
I'm experimenting with MPEG-4 and H.264 encoding in MPEG Streamclip just now. I'm trying to find a suitable setting for the quality control.
Best regards,
Henry

Ok, I found out that the sound format is kind of problematic, but I don't know what's the matter with the video stream. MPEG-4 should work.
MS MPEG-4 is a proprietary, non-standard MPEG-4 compression format. While you may have the appropriate QT component installed that will allow you to play these files back in the QT Player, I am not sure the codec will allow iMovie '08 to import/edit the video natively. And, as you previously indicated, the DVI ADPCM audio is known not to be compatible. Best approach would be to convert files to a fully supported (i.e., QT playback, conversion, and edit compatible format) manually or simply import them to iMovie '06 if your QT components support conversion to DV by iMovie '06.
There is nowhere a list to be found exactly stating the video formats iMovie 08 likes. It would be nice to use my videos as they are, but if conversion cannot be avoided (arg!), I would like to know a good target format.
For the most part, users here are still learning which compression formats are compatible and which aren't. I like AIC/Linear PCM (Apple Intermediate Codec with "Big Endian" audio), H,264/AAC, MJPEG/Linear PCM, DV, and MPEG4/AAC formats when proper data rates are used to preserve maximum quality. Would also like to use Apple Animation/Linear PCM which is import/edit compatible but it has an output bug which renders all video as a "black" display. Apple Video does the same thing but has less color depth so I would avoid it anyway. At least one individual has indicated Photo-JPEG video may have the same "black" display problem but I was not able to confirm this. Other formats will likely remain a questionable until somebody tries them and reports back. I suspect there may be other, less commonly used formats that also may be compatible.
I'm experimenting with MPEG-4 and H.264 encoding in MPEG Streamclip just now. I'm trying to find a suitable setting for the quality control.
H.264 usually works best if you simply do not limit the video data rate. However, to give you an idea of the data rates involved, this usually requires a video data rate on the order of 18-20 Mbps for VGA SD dimensions. MPEG-4 video data rates usually need to be 2.0-2.5 times as great. Total AIC audio + video is about the same as H.264/AAC, DV usually about 55 Mbps, and MJPEG/Linear PCM only about 12.5 Mbps (which is why I suspect iMovie '08 uses it for thumbnails and storage of photos used in a project).

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