MPEG is a delivery format and was not designed for editing. Some people experience no problem editing MPEG clips in Premiere Pro, while others are not so fortunate.
If you absolutely must use an MPEG file in your project you can either convert the MPEG file to a suitable AVI file with one of the many free utilities available from VideoHelp.com or you can buy a third-party plugin like “MPEG Pro” available from MainConcept.
Other software can also adversely affect Premiere Pro's ability to edit MPEG files. For example Sonic MyDVD.
See the C:\Program Files\Adobe\Premiere Pro x.x\ReadMe file for important information about MPEG encoding.
In many cases a quality setting of 2.5 will give the same results as a higher setting. A simplified explanation is that this setting works on a threshold basis, telling the encoder how far to look for certain things it needs to find. But in most cases it should be able to find those things without needing to take all of the allowed time. 2.5 should be fine for most material, and higher settings (which can slow down rendering significantly) should be reserved for problematic content. Two-pass can improve quality, but I think that the improvement is overrated by many people. With two-pass, the encoder makes a pass over the content to analyze and see which areas need to have a higher bitrate allocated to them. Then the second pass is done according to the findings of the first pass. More bandwidth is given to harder-to-encode scenes, while less is given to easier material. But the "gotcha" is that -- no matter how you allocate your bitrate -- the average quality of your video is still controlled by the average bitrate setting. Yes, two-pass encoding can make more efficient use of that bitrate, but the average bitrate setting still has a lot of control over the outcome. If you aren't trying to squeeze a ton of material onto a disc, I recommend constant bitrate.
If you try to import an MPEG-4 file into Premiere Pro 2.0 you’ll get a big fat dirty error message stating File Import Failure with a terse reason, “File format not supported”. Well, that’s not entirely true if you can play the file back through QuickTime 7. Simply open the file in QT 7 and go File -> Save As… -> Save as self-contained movie and it will now work!
Note that you cannot simply rename the .mp4 extension to .mov and expect it to work. What happens is the file’s header is rewritten to contain it within QuickTime’s API and allows Premiere Pro 2.0 to access the file without recompression. Hooray!
Just as a word of caution: Premiere Pro doesn't like to edit highly compressed files such as MP4. I would reccomend converting them to AVI. Also, just checked the manual. Premiere Pro does not support MP4 file imports.
Despite what the manual says, it’s empowering to know that you can achieve this. It is important to differentiate between what can be imported and what is officially supported.
Historically Premiere has received unfair criticism for sluggish/crash performance as it allowed the user to configure any internal compression setting. New users will notice that freedom is somewhat constricted in this version. It was not uncommon for a person to presume Sorenson 3 Pro was the best setting and the poor NLE struggled with the complexity of real-time encoding/decoding for such a sophisticated codec and then users were annoyed when it faulted.
It would be ideal to convert every file to AVI (though not with the DV codec if quality counts) but this process is laborious, time-consuming and unnecessary if the project is relatively straight forward. It’s great to know that I can lay down track of 2 hours of short films and burn a self-starting DVD without any intermediate process.