AVCHD compression as the FIRST step of video capture, then HDV is the logical response, hence HV30 is the logical recommendation.

Any half decent editor (Sony Vegas, Adobe Premiere, iMovieHD, FinalCut Express or Pro) can save to h.264/MPEG4 AVCHD file format. You do realize that regular DVD players won't decode this and only BluRay players (including PS3 game consoles) can deal with this file type...

I don't know if a 40 minute AVCHD encoded high definition file will fit on a regular double layer blank DVD (8.5 gig). Unless you are burning to a BluRay disc (start at 25 gig, I think) which can be read only by BluRay players.

An external drive just for video projects is always a good idea - minimum 500 gig.