Working with Heavily Compressed, Long Clips (ie DVD, h264)

Hi all. One of the main reasons I switched to Premiere back with CS5 was the mercury playback engine. I often have to make edits from many different sources and premiere allows me to just edit and not worry too much about it. I've done a good amount of reading on the way it works along with xmp metadata and the media cache and all of the various CFA/PKA files that get created to 'conform' clips. Most often these projects are short clips- the most would be a 12 minute DSLR file...
Recently, however, I had to do a project where the source was 8 DVDs, with 2 hours of footage each. My first thought was Mercury PE to the rescue! Just copy the VOBs to the hard drive and use those! On import it took a few minutes to conform, but then it had weird timecode that I couldn't change. Working with the files was somewhat responsive but not great.
(For clarity, my settings in media cache have the cache to a dedicated RAID, the "Save Media cache files next to originals" is UNCHECKED (because I don't want my project folders cluttered with extra stuff), write XMP ID is checked, "enable clip and XMP metadata linking" is checked and "Automatically refresh growing files" is checked - every 60 seconds.)
I needed the timecode to start at zero - any idea why I couldn't edit the timecode on VOB files that were copied to the hard drive? Anyway, to reset timecode and (I thought) get a better codec to work natively with, I converted to mp4 (h264) using Visualhub (old I know, but easy and stitches files together). These new files were about 3GB each, with the full DVD contents stitched together to 1 file, so I had continous timecode that started at zero (because the notes I was given were done on a DVD player). I have used DSLR h264 files before and they are fine - nothing like these, which were MUCH smaller and only around 1000kbit/sec)
Anyway, these files took longer to conform, and the CFA files created were actually LARGER than the original mp4s. They were very slow to work with, and each time I loaded a new clip into the source viewer it took 5-10 minutes before I could see anything (though audio worked). When it came time to render, an 8 minute timeline output to h264 took TWO HOURS! Each timeline had clips from multipe source files, and it seemed like every time it had to insert a clip from a different source file there was a LONG delay -- just like when the files were first imported. During this delay the render progress would not move, then it would go for a bit then another delay. What is happening here? Is it reconforming? Does it have to scan every file to export and if so why does it take so long?
Did I choose the worst possible by converting to h264? What's a better option? I really didn't want to use prores -- those file would have been huge and the quality is awful to begin with. It'd be insane overkill.
If anyone can help me wrap my head around why this seemingly easy project took me FOREVER (mostly due to invisible 'processing' by Premiere) I'd much appreciate it.
Thanks.
ScottieB

Fair enough but DV is large too. I'm trying to avoid getting back to huge files if I can but I understand that may not be possible. Is there some sort of intermediate between 1mbit and 25mbit? because even DV is overkill for the quality of footage Im talking about. Actually that's what makes this such a pain - it's such a silly, simple project that it seems insane to go through so much hassle. Not sure converting to DV would solve the weird timecode issue either but perhaps (it's been a while). I guess I was really just expecting this to be quick and easy.
I suppose with all the extra files being created DV wouldn't be that much bigger. I'm just shocked at how slow working with these h264 files was - especially when it came time to render. Once everything was conformed I didn't think it would have to re-scan (or whatever it was doing) when it came time to render.
Thanks for the input.

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