AVCHD to DVD (mpeg2) best quality



Hopefully this all-in-one question can be answered
I’m a total newbie to HD video. I just got a Canon HG20 AVCHD camcorder (records to HDD or SDHC cards).

I’ll be getting a 4gig/ 64-bit Vista/ NVIDIA 9400 laptop this weekend for, among other things, transfer of HD footage. I’ll also plan to buy Sony Vegas 9 for editing.

Initially, until Blu-ray recorders are cheap, I want to transfer edited HD video to regular DVD’s. (I’ll save the HD footage to a separate Hard Disc).

The main question I have is, will the mpeg2 decoder in my laptop (or is it the one with Vegas 9?) give the best available transcoding to DVD that I can currently get? Or would a separate transcoder be a good investment? What I’m looking for is the highest possible quality of standard (480i) DVD playback, so the quality of the Canon video can be realized on non-HD media.

If I can have significantly better DVD quality with a 3rd party mpeg2 transcoder, what would you recommend>?

Thanks in advance!