Jeremy,
You CAN burn HD video in blu-ray format to a DVD as long as it is under 4.3gb (or whatever the DVD media size is). However you must use a blu-ray player to play it back. I do it all the time with my short home movies of my son. I have a blu-ray burner for my larger projects (wedding, TV shoots) but anything under 30 mins or so you can burn to a DVD.
As far as the import method to Pinnacle, use MPEG. HDV IS an mpeg2 format. AVI is intended for SD material. I have Pinnacle 14 but haven’t used it in a while (use Vegas Pro now), but if it were even possible to record AVI as uncompressed your computer, you would be eating up approximately 10gb per minute of imported footage, and your computer has to be pretty hefty to even support that rate, let alone the size of storage you would need. The only way I can play back uncompressed video smoothly on my computer (which is a beast) is by playing it from my SSD, and even then it depends on the mood of my computer at the moment.
