The Panasonic Lumix DMC-ZS3 (also known as DMC-TZ7) can record 720p HD video in the AVCHD Lite video format (1280 x 720), with the ".mts" file extension, which has no time limit on video length and which has file sizes much smaller than the alternative Motion JPEG format.
To edit AVCHD Lite video (.mts), it is easier to first convert a copy of the video to an AVI file (.avi).