I would like to know if I can edit HD videos on FCP 5. Please let me know. Thanks

Yes. FCP 4.5 is the version where they added HD support.

Simple Answer is yes but....... There are some forms of HD which will not work well or at all on FCP 5 and HD also will put a strain on your Harddrive array. Also if you want to monitor outside of the computer you may need some additional Ram and hardware. You will be able to edit DVCPRO 100 but not XDCAM EX.