HD Camera, Formats, and Youtube Plus Video Editing

[outback]

I have a Panasonic Lumix DMC-FZ35, and It shoots video in a varity of formats. HD/AVCHD VGA/WVGA/QVGA, Plus Photos in Standard/Fine, M-JPEG, and Raw.

And I would like to present the best video quality on youtube that is possible with my internet connection. I only have 768 up stream.
Also it would be nice to get my videos uploaded in less than an hour two hours max. Up untill just this past week, I had only used a Kodak Easy Share, and used the Quick time 640X480 format, then converted it with Power Director 8 to a smaller format for youtube. I could get a 7 min video for example uploaded in less than 30 minutes. But the quality is lacking.

Is it possible that if I set my camera to HD 1280X720, and shoot my video, then convert it to a lesser size format, VGA 640X480 that the final result would be better, after uploaded, than if I had just recorded it at say VGA 640X480, then uploaded it ???

My reasonning is if the orignial quality is better, then after it's reincoded to a smaller format the quality would be better. Then if recodred in a Sorry format to begine with, then uploaded. Does that make any sence?

I just wanting to get the best video possible, with the least size file size.

My prefered video editor is powerdirector 8 ultra, but I have corel video studio pro x3 on my pc for the time being. As I'm not sure which to stay with.

I'd sure appreciate some feedback.
Thanks

P.S we have lots of wildlife in the back yard, and Lots of Deer and I'm wanting to get them on video.

[Soopafresh]

Better to record your video at the highest resolution possible and then resize with your editing program.

However, you should upload at 1280x720, h264 at 4500kb/s and AAC audio at 96kb/s if you want the best quality possible for Youtube. Video quality is much better on Vimeo.com.

The source file for this video is 1280x720, 4.5 minutes long and 215MB in size

[outback]

That was a very good video, outstanding quality for the size. Gess I'll stick with the tube sence vimeo is limited unless you pay.
Regards
Marty.M