I have noted that several HDV camcorders offer HD-SDI output (the XL-H1 and the XH-G1). As I understand it, this outputs at almost 1.5 Gbs. I thought that firewire maxed out at about 800 Mbs, so how do people use the HD-SDI ? Do they feed the output into another codec other than HDV and then record to hard drive ?

I have learned a bit more regarding this question. The HD-SDI from either of these two Canon camcorders can be fed into a computer with the Cineform Intermediate codec to generate avi files that can be editted on a PC with a NLE. The data rate on these files can vary between 15 and 30 MBs. My next question is, after editing, how would these files be outputted in a viewable format ? Would you save them on a hard drive as avi files or would it be better to convert them to some other form ?

1- The ideal solution is to capture HD-SDI without any compression. I can't remember the data rate, but it's about a few hundred megabytes a second. 10-bit uncompressed makes larger files than 8-bit.

2- Some systems can transcode the signal on the fly...
Avid & DNxHD
Cineform's Prospect HD (?)
FCP + Aja hardware can transcode to various QT codecs I believe

3- My next question is, after editing, how would these files be outputted in a viewable format ? Would you save them on a hard drive as avi files or would it be better to convert them to some other form ?
That depends on what your deliverables are...
HDCAM or HDCAM SR or DVCPRO HD or D-5 for broadcast. Use HD-SDI to interface with these decks.
A computer file
A streaming file for Internet delivery
HD DVDs (when the burners are available; not sure what the delivery format for pressed DVDs are)