Hi Johnny ...
Yes, you should record in HDV and downconvert to SD on playback (there should be a law against recording in DV on an FX1 !!). Better still, edit in HDV with Prem Pro or Vegas and downconvert to SD in softwareif you can.
The problem with recording gigs is that the lighting is unpredictable and usually all over the place. Spotlights will tend to burn out faces unless you hit the backlight button which sometimes helps, or you switch the camera to manual. Controlling the exposure manually is not easy when the lighting is changing all the time and your on the move. Also with the FX1 you have to remember to set the shutter speed to a 50th, the gain to zero, and then adjust the iris until you can see the faces properly without burnout (the zebra setting helps). If you dont set iris/gain/shiiter speed to manual the FX1 will happily wind the shuuter speed or gain up and down while you twiddle the iris so you won't have full manual control. If you end up with the iris fully open and the image is still too dark then bring the gain up until you get the image you want.
If all this seems like too much trouble then just stick it on auto everything and use the backlight button then you can concentrate on capturing the action - the FX1 will cope. If you're not confident with the FX1 then stick it on a tripod, but the results will be pretty static and unexciting.
As for audio, plugging into a PA mixer can be a problem in terms of signal levels - use a beach box (an audio/mic adaptor for external soureces) if you can get one - this will allow you to adjust the output from the mixer so as not to overload the FX1s mic input - if you get the audio wrong then the whole video is ruined. Try making a separate audio recording that you can edit or dub to the video afterwards, or use any old DV camera to record the audio to DV tape - this make it much easier to synchronise the audio with the video when you edit the show., and you can blend the FX1 live audio with the mixer audio, which tends to be harsh and dry on its own.
Hope this helps - let us know how you get on.