Great post Jim.
I don't want to beat this to death, but it's worth it to make the right decision (for both of us). I'd like to point out a few things though that you seem to have overlooked:
1) When using a dv camcorder, each frame can be extracted as a "still". In fact, I see no reason to use the still feature at all except to store it on the (separate) memory stick.
2) You can take only "stills" if you want, storing them to memory stick, and not use tapes at all - just like a camera if that's what you want.
3) You have many "shots" to choose the best one.
4) Movie bursts by digital cameras are at much reduced resolution and don't compare with the quality of a dv camcorder.
5) Camcorders have better zoom (I think), especially as compared to low cost cameras.
6) Today's dv camcorders, for $600 or $700 up, have 1 megapixels - 3 times what they originally had and 9 times what hi8 (or even DVD's) have.
True, it's only half of the 2 meg that you seem to find acceptable for a camera, but wouldn't the fact that you have many frames to choose the best offset this (almost)?
7) As far as transferring the video from dv camcorder to computer disk, the only problem I have had is familiarizing myself with the programs to do it - moviemaker (built into windows), MGI and Ulead (vendor programs supplied with IEEE1394 firewire card).
8) DV tapes are cheap at about $4 each and can be easily stored after putting (maybe only a short segment) on disk. That way, they can be revisited if necessary - an advantage unavailable for digital cameras.
9) What you say about using a laptop computer (with PC camera) as a camcorder is even less convenient than a camcorder. The video quality is poor. It would also fill up a laptop disk quickly.
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