Try muxing to an m2ts instead (tsMuxer is the easy option here). But be warned, it’ll be sluggish as heck - Premiere doesn’t handle h.264 all that well. You’d be better off converting to lossless (e.g. Lagarith) for anything serious.
That or just demux it using tsmuxer.
It depends entirely on your system, but you’re right that it doesn’t handle it nearly as well as a lossless file. H264 isn’t too terrible in Premiere if it’s only 720p, at least for me.