The GH1 is a micro four/thirds camera. It’s very compact but packs a powerful punch with good image quality, multiple aspect ratios (4:3, 3:2 or 16:9), face recognition and RAW capture capability. It piggybacks off the original Panasonic G1 by adding high-def video. And not just any high-def video, but 1080p video at 24 FPS or 720P video at 60 FPS.

What’s more, the camera is actually designed well from the start to shoot video. Unlike the Nikon D90 and less so, the Canon 5D MK II where video appeared to be bolted on as an afterthought, the GH1 seems designed from the beginning as a video camera that shoots stills too.

In places where it counts, the specs are stunning. The GH1 has a built-in stereo mic on top of the pop-up flash, a connector (3.5 mini jack) for an accessory mic and it also supports Dolby 5.1 surround sound. Being able to do serious audio is a big deal in these cameras and I am glad to see that Panasonic paid attention to it and even added a noise cut feature to the camera that’s designed to work much like the same feature in the Canon G9.

Panasonic also introduced some new lenses to go with this system. There is a new 14-140mm kit lens (28-280mm equivalent) with MEGA O.I.S. optical image stabilization. This lens was specifically designed to support HD movie recording. It features a silent motor and continuous auto focusing (AF) capability even during video capture! These are two features which distinguish the LUMIX GH1 from DSLRs that offer HD video recording capabilities.

Panasonic also announced a 7-14mm f/4 lens (14-28 35mm equivalent) and promised a pancake lens later next year as well as a 20mm f/1.7 lens.

The GH1 offers a 12-megapixel Live MOS sensor, tilt-swivel LCD, electronic viewfinder and Panasonic’s excellent iA Intelligent Auto shooting mode. I use the iA mode on my LX3 all the time because it works.

Can you replace your DSLR with one of these? Unlikely. Just as compact point and shoot cameras aren’t as responsive as DSLRs, the micro 4/3 camera is a little slow.

You can shoot up to ISO 400 on these cameras with no problem. ISO 800 is very usable. I wouldn’t consider going higher.

There are a limited number of lenses available for the GH1 and the G1 but Panasonic is promising an adapter that will allow you to use virtually any lens from any manufacturer on this system. I’ll believe that when I see it, but if true, it would surely cause a shift in the way business is done in the camera world.

I didn’t pick this camera because Panasonic’s PR did a great job promoting it. They didn’t. I picked it because the Panasonic engineers seem to construct a genuinely new type of camera that may indeed cause things to be different going forward.

Panasonic isn’t saying how much the GH1 will cost. Availability is also hard to pin down, but I heard phrases like “Later this summer” or “Later this year.”

Is this the camera for you? Maybe not. I’ll get one just to test it. I suspect that the progeny of this camera will be the real breakthrough. This is an interesting path. I don’t know if consumers will embrace these hybrid cameras. If they do, it will help save the camera industry from the same type of pain experienced by the car companies and other industries during this down economy.

Whether or not you like THIS camera, I selected it as a best of because it represents some new thinking. We need that. Innovation is important in photography. It always has been.