Actually pmhb, you should have started a new thread - your problem - it would seem - is VERY different from the OP's problem.
The OP has Mpeg2 footage from an standard def camera - this requires a special quicktime plugin to be able to be used in quicktime (or any tool that might transcode via quicktime like mpegstreamclip).
Your problem appears more that your camera records in AVCHD - the iMovie version you are using doesn't support AVCHD, which means it needs to be transcoded first. You have a few options on that (assuming your version of iMovie 06 is the same as iMovie HD - in this respect I honestly don't know) -
1) If you have iMovie 08 or 09 as well, use that to import the footage which will convert it to AIC, which from what I understand, is supported by iMovie HD.
2) Get mpegstreamclip and use it to transcode into AIC or some other format supported by your version of iMovie
3) Buy Voltaic HD and be prepared to wait forever as it transcodes very slowly but does a good job.
4) Buy Final Cut Express 4 and use it as it's a lot cheaper then Final Cut Studio - as it supports AVCHD and has timeline editing - it is more complicated then your version of iMovie from what I understand, but with your existing understanding of timeline editing it shouldn't take too long to pick up.