I finally just got my workflow down this weekend using FCE and Toast 10 Titanium PRO (finally broke down and moved from Toast 9 to Toast 10).
1. "Import" video file (AVCHD) via the log and transfer process.
2. Do the regular edits, chapter markers, titling with Live Type, etc.
3. When done editing, Do File>Export>Quicktime Movie. Uncheck the option "Make Movie Self-Contained". This will force Toast to be the one to do the encoding.
4. Open TOAST 10. Choose Burn a blue ray disc from a video file.
5. Drag your quicktime file in. You have the option to have a menu. By the way, if you exported your markers in FCE, Toast 10 will use them -- NICE!. So far I've used the default settings in TOAST 10 and have been VERY pleased with the video quality. It's very close to the original quality coming out of the Canon HFS10, though a bit softer.
6. Choose the media you want to burn to. In my case, I burn to DVD.
7. Then, you can click the big red button to burn. In my case, I choose save as an image file. This creates a *.TOAST file. Then I burn my DVD from this. I know this is an extra step but in doing so, I create a backup of my edited project that can be burned on a DVD at any time.
8. Toast will begin the encoding process. This may take a while. What I like about Toast 10 is it actually uses all 8 cores on my MacPro.
It took a lot of research and a long time for me to figure out this "combination" of software solution to come up with this workflow that worked for me and satisfied me as far as video quality. I hope this works for you as well. My next step is to tweak the setting in TOAST 10 to see if I can improve the video quality a bit more.