I use both LE 6.1 and AL7 concurrently and: Upgrade was £119

. I think its a pretty reasonable upgrade even if it doesnt at first appear to be a "revolutionary" one. The SP2 appears to have greatly matured it : initial bugs ( esp with DVD authoring) are now ironed out and it comes with Title Deko Pro on the install DVD.
Sony Vegas 6 + DVD ( which I (also) have as a complimentary copy but havent mastered
yet ) costs more than the upgrade and needs to be "learnt" ( I must say it looks interesting but Im yet to make the time to use it properly)
As for the import of .mt2 files for 6.1, I wouldnt know as I have no HC1( like you Im aspiring

) and havent tried with AL7 yet.
But 1 or 2 people Ive spoken to said they had to convert m2t to HDVmpeg2 for 6.1 which was not the case with LE6 so your suspision is probably right.
As an aside why not speak to
DVC ? They are very helpful even if they are not getting a sale off you. If anybody would know they would.
Im sure sample footage exists somewhere to try..anybody know where?