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alright so there is a few possible reasons that its being slow.
1) adobe premier is not the best program to edit with, its resource intensive, and fairly basic. after effects is better, and (imo) sony vegas. i know not everyone has the ability to use them, and im not hating on your setup, im jsut pointing out that it could be a reason. (ae is a little more resource intensive and therefore possibly slower, but imo puts out a better finished product so is an option , sony vegas is basic editing program that outputs good quality and isnt overly large meaning that it might run faster)
2) when you upgraded to the larger external hd did you check to see what the rpm of the hd was? there is a large difference in speeds between say a 4500 rpm hd and say a 7500 rpm hd, with the larger rpm hd being faster. generally (although not always) the larger sized storage external hd uses a slower rpm disk, so this could be part of your problem
3) are you running a 32 or 64 bit version of premier? 32 bit programs will run a max of 4gb of ram. even if your computer has more ram it will only be able to use that max amount. 64 bit programs on the other hand are capable of using all the ram that is available. to your pc
4) the way an editing program works is to create a "path" to the raw clip that you are working with. therefore when you edit footy from your external hd it has more hardware to go through to follow this path to the raw clip. if you copy the same clip to your documents, there is less computation needed to process the same data resulting in a faster running editing program. with this being said i keep all my footage in my documents, once im done my edit i delete everything except the finished product. (or dump the clips back to the external hd, as more than one project worth of clips tends to fill a comps hd fairly quick)
5) how many processes are you running while your trying to edit? running more process (ie, listening to music, surfing ns, and editing all at the same time) requires more resources and thus will run slower than a single process will. so hit ctrl + alt + delete, in the task manager go to the processes tab and end all the unessasary process (keep in mind that you cant close all processes, there are system processes in this list as well)
you cannot edit in 720p and render in 1080p and still get a good final product. most websites ie youtube etc, will support 1080p, but you really cant tell the difference between 720p and 1080p when streaming anyway (or the general public cant) so if your worried about it being slow then edit and render in 720p. (besides its all about framerate, not the aspect ratio ;) )
hopefully ive covered everything, and hopefully my long post actually answered your questions as i have a tendency to babble haha lol. if you have any more questions feel free to pm me and i can probably answer some stuff a little more specifically. gl with editing :)
vegas vs premier is all preference, i have both, i prefer vegas, others (such as yourself)may disagree. the only reason i mentioned vegas is because it is less resource intensive than premiere and would run faster than premiere if it was indeed hardware that was limiting the speed.
ae may be an effect program by nature, but the fact that it has ram preview, and due to its modular nature (ie theres an almost infinite amount of plugins available) it has the ability to be whatever you want. ram preview is especially useful for edits where the combined total of the raw clips exceeds 50gb (personally ive noticed that this tends to be when an editing program becomes unstable and may crash, may be different for others) ram preview is the reason that i mentioned ae, shows the video n realtime so you can edit without the clips lagging. now i will admit though that it takes a pretty good computer to run ae to assemble an edit. My computer is pretty decent, and ive worked with ae intricately for years, so its my preference. it might not work for everyone though.
sorry i should have been a little more specific when i was explaining this lol. i keep forgetting that im new to this community, and my style and what im used to isnt neccasarily what everyone here does. if there was anything else that i wasn't clear about please dont hesitate to ask and ill try to clear it up