I wanted to ask if it is at all possible to mix the HD footage from my Sony Z1 with the HD progressive footage from the JVC 111 on the same timeline in premiere CS3?

As far as I can figure out both are shot in their own format but are then upscaled to the correct HD ratio on the timeline. I will be using them in PAL format but I think HD in PAL is the same as NTSC, I know so many questions bu I'm really confused.

Premiere will handle it, but for best quality result I would take a tool like Cineform to deinterlease the Z1 footage first, and then load it into premiere as identical files.

Since you are in PAL you should just work in a 50i timeline and then the 25P material will look completely normal.
Of course the 50i material will still look like 50i and I'm not sure that's what you want.

I suppose this is for another forum but what looks the best for a wedding, interlaced or progressive, especially for the dancing as it is quite fast moving and I wonder would the progressive look choppy during this?