unpacking MTS files

[Mr-T]

Hey!
I've been shooting on a Panasonic camera, which outputs in MTS files. No problem to edit, but the problem is the picture quality.
I heard that the camera compresses the files, to make it fit on the memorycard and then it folds the files out when it's being captured in Final cut for example. It's that true?
I didn't capture the files, I just drag and dropped the files from the folder, so i think I've missed the unpacking part? and if so, can I unpack them, with the files I have now on my computer ? (deleted the original files on the camera).

AVCHD. 1080.
1minut = 156GB.

Edit in Premiere CS5

Thanks

[Marc Peters]

Video compression isn't like zip compression; video compression works by throwing away data that's not needed rather than squeezing it. So there's not really a concept of unpacking and you're editing the highest quality by editing th AVCHD files in premiere. Does that answer your question?