Well so much for getting a better video editing program. I tried to edit some video files from the SDR-S7 on a mates PC running Adobe Premiere and it wouldn't open the files. After further investigation it seems that Panasonic (and a few others inc JVC) while recording mpeg2 actually compress it and save as an .mod file which most 3rd party editing software can't read. As far as I can tell most Cardcams and HDDcams save as .mod and while there are ways to work around (changing the file association from .mod to .mpeg) there are one or two issues. I don't fancy having to rename a folder full of clips one at a time so it looks like I'm stuck with using the supplied editing software. No big deal I suppose given the intended use but it would have been nice if they had made it clear that although the camera can record mpeg it actually saves them as something else.
I did find one editing program that looks like it can handle .mod files but sod's law comes into play as it doesn't display Panasonic SDR-S7 file properly if you've shot in 16:9 format as Panasonic uses a non-standard 704 x 576 frame rather than the standard (IIRC) 720 x 576.
The program is Cyberlink's Power Director, there's a review of the software Here