Thanks for the comment John. I'm very aware of what an AVI file is and also that it is a container format just like MKV, MOV, etc. Since I said Camtasia I thought everyone would know that meant it is a TSCC file, their proprietary codec format. Anyway, the clip edits perfectly within their rudimentary Camtasia editing application but I would greatly prefer to use Premiere of course. Unfortunately Premiere is as finicky now as it ever has been about accepting and editing a variety of formats that other editing programs are able to handle.
To say " playing and editing are VERY different operations" is the same as saying that driving a car and riding in a car are very different operations as well, and seems quite obvious and pointless to say. If we are playing by the rules then once a codec is installed and recordable and playable by programs on the operating system we have every expectation that ANY program that access the codec will be able to handle it. CODEC means compression/decompression algorithm does it not? The TSCC codec is properly installed on my system and Premiere opens it allows me to trim the file and drop it into a timeline. It just fails to decompress and edit it.
Perhaps someone has solved this Camtasia format problem but if not then it can be added to the long list of formats Premiere does not currently edit properly which I feel is disappointing considering the level this program aspires to.