Which settings for exporting from iMovie '09

I have a couple of projects coming up, and I'll be using a MiniDV camera (Canon XL1S) and a hard drive camera (Canon Vixia HG21).
For final editing I'm using iMovie 6 (still feel the most comfortable with it), but need to use iMovie '09 to import AVCHD footage from the HG21.
What are the best settings to use for exporting that footage out of '09 and into '06? I hate to lose major quality on the HG21, but don't really mind if it looks comparable to the XL1S. These projects are really demanding that I keep it at optimum HD quality (besides, I'm not sure if I have the HD space to work with the biggest files. Also, I don't plan on burn to Blu-ray or anything like that. I'm just needing to burn standard-definition DVDs, and plan on doing that with iDVD.
Basically I looking for advice on the proper quality settings for these needs, and also wondering if I'm looking at any issues regarding the different aspect ratios I'll be dealing with.
Thanks much…

Many thanks Lennart, and my apologies for a typo earlier when really confused you by leaving out one key word. I meant to say, "These projects are really (not) demanding that I keep it at optimum HD quality…"
I like your idea of pillarboxing the whole project, filling an entire widescreen TV with my Vixio footage. I assume the key is to open my new iMovie '06 project with the "DV Widescreen" setting, right?
Regarding how to convert AVCHD down to SD… I've been experimenting some with iMovie '09 on my intel-MacBook. Please tell me if I can forego the VoltaicHD purchase by doing this:
- I'm importing my Vixio footage into '09, choosing the "Large - 960x540" setting, just to keep the file size down.
- I'm then choosing Share>Export Movie, and again, I'm choosing the "Large" radio button.
- When the movie has exported, I'm seeing that it is saved with a .m4v extension. iMovie '06 will not allow me to drag a .m4v file into the clip pane. However, if I change the extension to .mov, I AM able to drag it in, and it appears that all is working ok.
What do you think? Is this workable? Am I sacrificing something with this method? Though I have not yet ripped anything to DVD, the quality seems good, (for SD standards, anyway).
One other question: Is it possible to export multiple clips out of '09 so that they can be brought into '06 individually? So far, all I'm able to do is to export them as one complete "movie," with all of my raw clips locked together. I'd like to have them separated when they arrive in '06. Maybe this is easy to do, and I just have not figured out this feature in '09.
Thx again…

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