Video Camera to Blu-ray Disc

Greetings Forum Members -

Its time for me to take the next step in technology and update my system and video hardware from the CS2 and MiniDV that I currently use and seek advise from you all.

I am looking at the CS4 version of Premiere and the Sony HDR-XR200VE video camera. What I don't understand is how the footage is captured or recognised by Premiere off the camera. Is it imported and recoded to the compatible bluray formats in HD for Encore to create the Bluray disc.

Or is the camera recognised as an external drive and Premiere Pro works with it online and only recodes transitions and effects in the output stage?

Its a lot of money to spend on the upgrades for software and hardware and value your opinons on both.

Many thanks,

Ausdigital.