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Most of the video forums seem to recommend avi using HuffYUV lossless compression, which Super supports. If you need the codec, you can get it here http://neuron2.net/www.math.berkeley.edu/benrg/huffyuv.html
A quick Google search will link to lots of info about it. You’ll need lots of space, though.
What you are asking is two different things. You either want an MPEG editor or a converter to allow you to edit in Premiere. A very decent freeware converter is Super. It will convert nearly anything to anything. You’ll have to play around with it.
As for Premiere and MPEG, Adobe’s site says this:
Importing and exporting MPEG files in Premiere
Although Premiere can import and export MPEG files, Adobe recommends that you don’t use MPEG files as source files in a Premiere project. Instead, use MPEG as the final output format of your project. MPEG files don’t lend themselves to editing because the video frames in an MPEG file aren’t self-contained. That is, any given video frame contains only the information that has changed from the previous frame. During editing, a previous frame required to fully decompress a given frame may not be present, resulting in poor quality of the final rendered frame.
So, it doesn’t matter that they use the same rendering engine for Encore and Premiere. Premiere is trying to do something different than Encore. I had to throw away hours of work in Premiere and After Effects because they were MPEG2. It basically jumped from I frame to I frame.
Also, go to http://www.adobe.com/support/techdocs/324997.html for an answer on the MP3 error problem. I haven’t worked with MP3s and ID tags, myself, so I can’t help there.
Premiere will import, but Adobe’s site says that it’s not really recommended, due to the way Mpeg is compressed. When it did it, it was all jumpy.
I’d check out videohelp.com tools section for recommendations on free mpeg editors. I recommend VideoRedo.com as a very simple effective one. It has a free trial, and the purchase price is reasonable.
I think Cfulton just misread the question, because his response is about Encore.
Premiere really doesn’t import Mpeg very well. You would be better off converting it to an AVI format or editing in Womble or VideoRedo, or any Mpeg editor. If you want to use Premiere, best to convert to an AVI format (remember, AVI is a container not an actual format) with low compression, like a DV type format.