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I would not judge the playback on what you see in the playback window in the software. You may have to 'render' the footage to get it to playback smoothly.
Premiere Elements 7 should be more than capable of editing the output. It can handle more difficult formats than the 5D II's output.
QuickTime Pro has an editing facility as well.
Codecs & Drivers & overall system capability spring to mind........!
When running anything that requires system resources, Make sure background programs are not hogging any.
Check out " Roxio Sonic " Meadia Creator 2009......One suite with all the solutions.............
Get a 30 day trial of Vegas Video it's not a dinosaur like Première and is far more mature than FCP.
Lol@ Chris. 
Premiere Elements 7 is considered, by those who know what they are talking about, to be one of the best entry-level bits of software for handling AVCHD and H.264 output.
Works fine with my H.264 footage so should be OK with that from the 5D II.
another vote here for sony vegas, not sure how much it costs though
I do know what I'm talking about when it comes to NLEs and Sony's video editing products are amongst the very best.
Sony know what they're talking about when it comes to HD (unlike Adobe, Sony actually make broadcast and consumer HD video cameras, produce movies and of course are a founder member of the Blu Ray Disc Association).
Adobe delayed their entry into AVCHD editing, so were able to capitalise on the mistakes made by others - including Sony! 
I repeat: for entry-level HD editing, Premiere Elements 7 is generally considered, by those who actually make a living from video, the pick of the bunch.
Moreover, I have actually used it myself for HD (H.264) editing whereas I suspect you have not edited any H.264 footage at all, Chris? (Apols if that is not the case )
It may well be for old-fashioned standard def stuff, some other products might be better but we are talking about HD here, specifically about H.264 and even more specifically about the files generated by the Canon 5D II.
Hi Guys,
I have tried Premiere elements 7 but find the quality of the rendered files to be rather poor (I think they are converted to standard def by the software). The original High Def video is of a very high quality when viwed on Windows media player. Quicktime also produces a high def image but play back is jerky. Perhaps I should try Roxio or Vegas?
Quote: Quicktime also produces a high def image but play back is jerky.
What spec is your system? such as OS, Processor and RAM
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