Premiere elements is the "light" version just like the relationship between photoshop and photoshop elements.
Wha tactually means I don't know unfortunately since I'm using Premiere Pro 1.5.
I do know however that Premiere Pro 2.0 which is the latest version doesn't offer full backwards compatibility for premiere project files, so if you're half way through a piece, don't switch versions.
If not then I'd say look at upgrading the software, since I can run fraps @ 25fps full screen with sound, which gives me a huge file but that's no problem, I can then edit the files in Premeire also without a problem. I can even layer them and render more than one copy of the fraps file at once as long as I don't have anything better to do for a while, or want to do anything else at the same time....
I don't have a super computer either :-AMD 3400 64bit, 1gb RAM, 200gb SATA hdd.