[apple smith]

iMovie will also allow you to import the following file formats:
MPEG-2 and AVCHD from Camcorders, DV (standard definition) and HDV
(high definition), MPEG-4, DV, and .MPG files stored in Mac. If you
want to import .mpg video files into imovie, you should convert .mpg
video files to iMovie support video formats.

MPG to iMovie Converter not only can import.mpg video files into
imovie on Mac OS X, but also can import AVI, MP4, MOV, FLV, WMV,TS,
DV, F4V, MKV, MOD, TOD, AVCHD, HD Video, MP3, AAC, WMA, AU, AIFF,
FLAC, CAF, SD2, etc. into iMovie on Mac OS X. MPG to iMovie Converter
is the most powerful Mac Video Converter for you to import video on
Mac OS X (Leopard supported).

How to import mpg into imovie on mac os x?

http://www.4yousoft.com/imovie/mpg-to-imovie.htm

Step 1: Download, install and run MPG to iMovie Converter
It's simple and quickly.

Step 2: Add .mpeg video files
Click the "Add files" button to import your mpg files. This mpg into
imovie converter support batch conversion, so you can import multiple
files at a time.

Step 3: Select output format: "MPEG-4 Movie (*mp4)"

Step 4: Convert
Click "Convert" button, it begins to convert your .mpg files to imovie
mp4 format.

Step 5: Importing convertion mpg files to imovie
Launch iMovie, go to "file import movies". Select the converted MP4
video then click "import".

http://www.4yousoft.com/imovie/mpg-to-imovie.htm