“I have an iMac and AVCHD Sony video camera. Final Cut Express imports AVCHD files, but FCE does not output AVCHD. I’d like to create a Blu-ray disc with my AVCHD video. What is the best solution to edit my AVCHD files? Can I use FCE for editing and Adobe Encore CS4 for the high definition menu for Blu-ray? If so, which format should I choose for the output from FCE in high definition?”
Choosing the right tools for editing and authoring Blu-ray on a Mac is still somewhat confusing. Based on the tools you have available, I’m inclined to recommend editing with Adobe Premiere Pro and authoring a Blu-ray disc with Adobe Encore. However, if you are more familiar with editing in Final Cut Express, I can certainly understand the appeal of sticking with what you know. As for which settings to choose in either route, let me make a few suggestions.

No matter which editing software you use, you want to output h.264 MPEG-4 video at 1280×720 or higher resolution. Ideally, this should be a video only track that can be put in a transport stream by Adobe Encore without transcoding. The audio you export should ideally be Dolby Digital Stereo AC3 as a separate file. Using those settings will allow you to avoid degrading your video quality when you author the Blu-ray disc in Adobe Encore.
If you can’t separate the audio and video, you still should use h.264 MPEG-4 video and AC3 audio. Another possible solution to your problem would be to edit with FCE and make your Blu-ray disk using Toast Titanium.