Hi Richard,
Welcome to the Cyberlink forum! You've come to the right place.
When PowerDirector converts your file to MPEG-2, it retains full hi-def attributes. After converting to MPEG-2, rightclick on a video clip and select Properties. You should see a Resolution of 1440 x 1080. Also note the Audio section. PowerDirector keeps the Dolby Digital surround (I read that some AVCHD editing packages convert to stereo).
When you click the "Create Disc" button, you are downrezzing your video to standard definition for DVD burning purposes.
To create a Blu-ray disk, you will need a Blu-ray burner and the PowerProducer software (PowerDirector does not burn Blu-ray at this time).
After converting your AVCHD files and editing your video in PowerDirector, press the "Produce" button, rather than the "Create Disc" button.
1) Select "Create a File", then click the Next (green rightarrow) button.
2) Select".MPEG2", then either "[HDV MPEG-2 720P]" or "[HDV MPEG-2 1080i]" in the Profile Name/Quality dropdown. Click the Next button
3) Click the three dots [...] next to the Filename field and enter your desired path and filename. Click the Checkmark to start producing your hi-def video file.
When PowerDirector is finished producing the video file, open the file in PowerProducer and burn your Blu-ray DVD!
I would recommend starting with BD-RE disks. These are re-writable and great for testing your first few projects.
Hope this is helpful.
Brady