I finally tried importing the 8mm tapes from my Sony TRV-330 into iMovie HD and it worked. Really seems strange to me why Apple would not make iMovie '08 backwards compatible with analog 8mm tapes imported using a digital camcorder.
I doubt that Apple made the program less compatible with your camcorder on purpose. More like, in their effort to add compatibility with AVCHD, HDD, and DVD camcorders, something was changed which affects you and a number of other users. Given time, I expect they will locate the problem and fix it. The quest is, who long will it take. Be sure to post a feedback regarding your problem. They people who do this, the more likely they will take note and find a solution to this inconsistency between iMovie HD and iMovie '08.
I'm wondering if I can skip the second step if the video is already on my hard drive, or does it need to be saved in iMovie HD format for iMovie '08 to be able to import the video at all?
Well, I probably would have gone about it somewhat differently. If you don't plan to do any editing in iMovie HD, I would probably have tried VIDI (free) first. It is a dedicated DV "capture" utility of about the same vintage as your camcorder. It should allow you to import/store your DV files where you want in "plain sight" of the Finder rather than in iMovie HD's project package. It still imports in real time so no savings here.
Then you would have the option of using them in any editor or even making preliminary cuts of your files in either QT Pro, MPEG Streamclip, or any similar utility. The idea here is to discard everything you know you won't want and save time when it comes to generating "thumbnails" (which sometimes seems to take forever) in iMovie '08 when you actually move or copy the files into iMovie '08 which should take almost no time at all if the source files are on the same drive as your events folder and you use the "Move" rather than "Copy" option. (I.e., a "Move" action only requires updating the VTOC as to the files physical location via a changed path as opposed to a "Copy" which actually has to re-write the data to your hard drive. This can save a fair amount of time if done right. Unfortunately, there is no way to get around "thumbnail" generation.
Another possible tip would be to import a series of moderately sized files to iMovie '08 rather than a single, large one. This can save time in the event that an associated thumbnail file becomes corrupted and you have to force iMovie '08 to regenerate them at some later time. (I.e this seems to be a common problem for some users, but I have only experienced it once, myself, thankfully. ("Knock on wood.")
In any event, that is about all I can think of for now. Good Luck.