With the M2TS extension, MC plays them on my machine. That being said, I may have added M2TS as a valid video type to the Windows Registry for WMP11 playback. The bad news is that with the codecs I have installed, the video looks like total crap. Need to get a decent AVCHD CODEC installed if I want to use my PC as my playback device. The 'free' codecs most of us have installed don't handle AVCHD very well - resulting in lots of dropped frames or poor image quality. The same file on my PS3 looks a million times better.
If you need to rename the file to something - use MPG, not AVI. AVCHD is an MPEG variant.