Well I don't know the Sony DCR-PC120. I have bought the Panasonic MX-8 and I am generally very happy with it. (It is however my first camcorder so I don't have a lot of comparison).
The MX-8 lens is obviously of a very high quality. I have taken some outdoor footage in good light conditions, and the results are excellent - super sharp and with impressive colour reproduction. The camera also takes good quality videos under indoor light. Of course with less light colours are less intense and detail is less as well, but the results are still good.
The so-called chromatic aberations (purple fringe) are visible in full zoom, but I have seen worse from digital still cameras with a 10x zoom lens, so I'd say that the MX-8 lens performs very well here too. Macro shots are perfect too (unless the lighting conditions are very poor, then the MX-8 sometimes has problems focusing on the target, but this is only under extreme conditions, like a close-up in a dimly lit room.
The optical image stabilizer also works excellent, an extremely important feature whenever you work without a tripod.
It is also very easy to take digital still, just changing a switch from tape to card mode (or record stills on the tape). I own a 3.3 megapixel Nikon digital camera, and of course the MX-8 still don't have a similar quality, but for a lot of purposes the images are alright. For a 1280*960 resolution they are actually very good, so that I started to use the camcorder for casual shots quite regularly. The pop-up flash works well and has several intensity settings too, as well as auto and manual mode.
The MX-8 is also quite quick taking a still shot. It seems to capture virtually immediately when I press the button. This is definitely faster than my Nikon which e.g. often has a delay of something like half a second when you press the shutter button. (Bad thing when I want to take one of these sudden snapshots of my cats fooling around

).
I went for the MX-8 also because it was down in price to £780 at RGB direct. That allows for additional batteries (absolutely necessary - buy a 1600 or 2800mA one!) and some tapes within the £1k budget.
So, all in all, I am very happy with the MX-8 and can highly recommend it. I saw reviews which rated it top and gave it a best buy recommendation fpr a MSRP of £1200 so that makes me even happier with it

.