I always import raw AVI's and manipulate them from the hard drive. It is possible to skit that step (seemingly) but it still has to route through your cpu and memory which would work out even worse for you without a TON of ram. Just stick with the capturing to disk method. If you have hard drive space concerns I would suggest getting an Iomega 20 gig HDD Firewire drive for around $200 bucks.
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