Finally heard back from panasonic and they are basically saying they are not to blame :
PANASONIC EMAIL:
I am sorry to learn of the issues you are having with your Panasonic camcorder.
In response to your email I have checked with our software support team in regards to the problem you are having with OSX Lion.
They unfortunately do not have a solution for this problem & have recommended that you contact Apples support team for assistance.
They have also stated that our camcorders do work fine with OSX Leopard so the issue will be with the operating system & not the camcorder.
I am sorry that I could not have been of more help to you in this matter. If you should have any further questions or concerns please do contact our software support team on 0844 844 3869
Kind regards,
Joseph McLachlan
Administrator
Customer Communications Centre
Panasonic UK, a branch of Panasonic Marketing Europe GmbH
So unfortunatly I think we are going to be sitting with this problem a lot longer than I had originally thought.