Thanks Greg, I checked that out.
It seems like I do have the requirements according to that document. Granted it's towards the minimum: Macbook I7, AMD Radeon HD 6750M 1024 MB. I also tried editing the same footage on my 2 year-old IMac I7 with 16gigs of RAM. Same thing. I thought it was because my IMac doesn't meet the Mercury requirements. Funny thing too is I tried editing on both the internal HD and a new external RAID at 7200RPM. No dice.
I'm not saying it doesn't work AT ALL. The actual editing in the timeline is fine. It's just very sluggish when playing back and seaching through clips etc. And multiply that over a project and it adds a considerable amount of time.
Any suggestions?