Replying to Final Cut Express - AVCHD question

So I had a 4 gig memory stick from a Sony CX7 camera (records in AVCHD) and I'm logging it into FCE and after the first three clips (of 250) its already taken up 2.5 gigs.  Is this format really that compressed on the card and does final cut have to completely uncompress it or what?
I saved the project to an external hard drive but still when I start the logging it saves the files to my computer.  How can I get these to go to the external?  I definitely don't have enough space on my comps hdd to import all these files..

ANY help would be great.  I'm completely knew to the HD and FC world.