i had the same reservations as you did.
I just finished a project on Premirer 6.0 with a screen size of 720x480 using 3 chip sony camera. I cut out the scenes that I wanted effects put into, imported the smaller clips into ALAMDV and added what I wanted. I then rendered my work reinserted them into premiere, replaced the sound and finalized my project.
You cant tell the difference in the quality of the scenes I imported into Alam and those I did not. There is no loss of the digital information. I am very happy with the program.
Some of the effects need to be updated, but that will happen in time. And they are getting better and better. So who knows what the next post will bring!?!
Email me if you have any questions