No experience using Pinnacle I'm afraid. And there may not be many around here who do. You should post at www.videohelp.com

You didn't mention Womble. Womble Mpeg Video Wizard DVD (awkward name) is designed to work with mpeg files with minimum reencoding at edit points. They do offer a 30 day trial for this software. It would be the first of the consumer level editing programs I would try when working with mpeg files.
http://www.womble.com/products/dvd.html