The camcorder market is well, complicated. For most the need is to record and play back. No editing. So the makers make such a camcorder. It's up to us to research if what we buy does what we want.
And conversion will eventually be mandatory as we create some DVD or BluRay media. This may sound terrible but a good video editor would just do that for us.
What m2ts or MTS2 (which get you different answers) is is at http://www.google.com/search?hl=en&q=m2ts or http://en.wikipedia.org/wiki/.m2ts
"Software support
Almost all commercially produced Blu-ray Disc titles use copy protection method called Advanced Access Content System, which encrypts content of the disc (including M2TS files). Software that supports M2TS files usually works only with decrypted or unencrypted files. Blu-ray Disc software players can usually play back encrypted content from original disc. Video content created using an AVCHD equipment is commonly unencrypted.
Currently, M2TS files can be played using the Picture Motion Browser, which is an application video player provided with Sony AVCHD camcorders.
Some M2TS files can be played with ALLPlayer, MPlayer, Windows Media Player, VLC and other media players, depending on used compression formats in a M2TS file. Some players will need an appropriate codec, component or plugin installed.[citation needed] The file type .m2ts is not always automatically associated with the player, so it may be necessary to open it from the player.
Current versions of Nero Vision, AVS Video Converter, FormatFactory, Total video converter, MediaCoder, HandBrake and Picture Motion Browser are capable of converting M2TS files into MPEG-4 files, which can also be viewed using the aforementioned media players.
Sony products Media Manager PRO for PSP, Media Manager PRO for Walkman, and Mobile Media Manager PRO are all capable of converting M2TS format to MP4 files.
M2TS format from Sony is not necessarily the same as that of Panasonic or Canon camcorders. However, programs like Sony Vegas Pro and AVS Video Editor can open and edit both Sony M2TS files as well as Panasonic M2TS files. (Sony Vegas Pro v.9 is also capable of reading and editing M2TS files produced by Canon Vixia Camcorders.) The only other piece of software known currently to handle both types is Pinnacle Studio 12 Ultimate and Cyberlink Power Director v8.
M2TS files can also be played on Sony PlayStation 3s, Sony Bravia TVs, Western Digital WDTVs, Xtreamer media player, and Panasonic Viera TVs supporting playback of AVCHD."
So there it is for you to ponder.
As to quality loss, you'll have to test it and see. Most don't lose much.
"can PE 8 work w/ m2ts directly?"
I don't have that so you have to rely on it's maker for the answer.
Bob