guyburns, I'll tell you my own experiences with .mts files, private folders, and various editing software so far:
Vegas (v7, v9, v10): handles pure .mts files without the folder structure beautifully. The only limitation that I've run into so far was on interviews where the clip went over the 4GB file limit. In those cases, instead of one single file, I ended up with two files. The split obviously occurred at some unpredictable time.
Premiere (CS6): for the most part also handles pure .mts files without accompanying folder structure well. In addition to the spanning limitation mentioned above, another limitation that I ran into with this software was that it would not allow me to "analyze the footage" of an isolated .mts file in order to use the dialog transcription feature of Premiere. It took some research to find out that that was the reason.
Final Cut Pro (7): I have not used this software myself, but have given my AVCHD footage to editors who use it, and I came to find out that it is apparently completely unable to do anything with .mts files unless you have the proper folder structure to go along with them. You would basically have to convert the files to something else using another program before you can edit them in FCP 7. Otherwise, the solution that Pete just posted above could work. I wish I had known about that before, actually, and will give it a try soon.
In my conclusion, there's quite a bit of variation in how the different editing software handle .mts files, so just be aware of how your editing software deals with them before doing anything. In the past I had always just copied the .mts files without the folder, because it just seems stupid to HAVE to take the folder along with them, but now the more I learn and work with AVCHD material I'm realizing that I may be better off in general by adopting the practice of copying and keeping the whole intact PRIVATE folder. I still think it's stupid though, especially when you consider that in other situations it's quite a normal thing to do, like when you copy photos directly out of the deep folders of a still camera's memory card. You don't (at least I don't) usually copy the whole folder, but only the files that you want. I feel the same way you do, in that I would prefer to not have to keep that folder since it seems messy and inefficient.
Vegas (v7, v9, v10): handles pure .mts files without the folder structure beautifully. The only limitation that I've run into so far was on interviews where the clip went over the 4GB file limit. In those cases, instead of one single file, I ended up with two files. The split obviously occurred at some unpredictable time.
Premiere (CS6): for the most part also handles pure .mts files without accompanying folder structure well. In addition to the spanning limitation mentioned above, another limitation that I ran into with this software was that it would not allow me to "analyze the footage" of an isolated .mts file in order to use the dialog transcription feature of Premiere. It took some research to find out that that was the reason.
Final Cut Pro (7): I have not used this software myself, but have given my AVCHD footage to editors who use it, and I came to find out that it is apparently completely unable to do anything with .mts files unless you have the proper folder structure to go along with them. You would basically have to convert the files to something else using another program before you can edit them in FCP 7. Otherwise, the solution that Pete just posted above could work. I wish I had known about that before, actually, and will give it a try soon.
In my conclusion, there's quite a bit of variation in how the different editing software handle .mts files, so just be aware of how your editing software deals with them before doing anything. In the past I had always just copied the .mts files without the folder, because it just seems stupid to HAVE to take the folder along with them, but now the more I learn and work with AVCHD material I'm realizing that I may be better off in general by adopting the practice of copying and keeping the whole intact PRIVATE folder. I still think it's stupid though, especially when you consider that in other situations it's quite a normal thing to do, like when you copy photos directly out of the deep folders of a still camera's memory card. You don't (at least I don't) usually copy the whole folder, but only the files that you want. I feel the same way you do, in that I would prefer to not have to keep that folder since it seems messy and inefficient.