First off, as the title of my review states, this camcorder is not recommended for users who don't want to fiddle with manual controls and just prefer to point-and-shoot. If you only use the default program settings (Program AE mode), you will be in for a disappointment when using this camcorder indoors. At the default program settings, this camcorder excessively jacks up the gain control and uses a fast shutter speed of 1/60s resulting to horrible trailing noise in even relatively bright indoor conditions. No problem however for bright outdoor conditions if that's what you intend to use it for. You just can leave it in the default 'Program AE' mode.
For indoor conditions however and for most other dim lighting conditions, I suggest you use the following manual settings
for the best video quality:

1. Shooting mode: Choose Shutter priority with 1/30s shutter speed (1/60s and above is only good for daytime outdoor conditions).
While the motion will be somewhat less smoother with a 1/30s shutter speed vs. 1/60s shutter speed, the slower shutter will allow for more light in challenging situations which will make the camcorder not jack up the gain control (AGC) to the maximum setting.

2. AGC (auto gain control): Set this to 16dB or less. This is sort of like an ISO setting in a digital camera. The higher the setting, the brighter the video capture but the more horrible and visible the trailing noise is. Setting it at 16dB or less limits the camcorder to manageable noise levels which, in low light and upon viewing in my Avia calibrated Sony LCD tv, is acceptable and very natural looking (grainy) rather than horribly blotchy in appearance which happens when the AGC is set too high (typically 18dB or higher). (The higher, the more blotchy and trailing the noise is when recording in moderate to low lighting conditions.)

3. Picture mode - choose 'Custom' and adjust the settings as follows for better color and detail retention:
Brightness = +1 (more shadow detail)
Contrast = -1 (less highlight clipping even with brightness set to +1)
Color = +1 (increases color saturation to compensate for the desaturation brought about by '+1' brightness and '-1' contrast)
Sharpness = 0 (improves video detail and changes the noise characteristics from 'blotchy'[-1] to 'grainy'[0] [more preferable])
(Some of you may prefer the +1 sharpness setting)
4. XV color mode = ON (Set this to 'ON' for a wider color gamut video capture.)

There you have it. Using these settings for your HF M300 camcorder should yield the best HD video quality in any indoor lighting condition, at least if you have calibrated your LCD tv like I do. (I use 'AVIA guide to home theater' in calibrating my 1080p Sony LCD tv.)

If after following the suggested manual settings above, you still feel the camcorder's HD video is horrible in indoor/low light conditions and there are better options out there for the same price range, then go ahead, buy them instead of this reasonably priced camcorder (at least when compared to the Sony XR150 which I also reviewed and returned because of super clean, soft and mushy, 'upscaled' HD video). The Canon Vixia HF M300 is probably the best performing camcorder for its price (currently at $438.82) in all lighting conditions. Simply spectacular in daylight, and very good in low light if you just try these custom settings. Forget the overpriced $649.99-$1,499.95 Vixia HF 100 (2008 model) and the $849.99 Vixia HF 200 (2009 model). They have since been replaced by this 'touch screen' 'XV color' equipped $438.82 HF M300 (2010 model) at a fraction of the cost of the previous two models and with better features. Forget also about using the MXP (24mbps) mode when recording your HD videos with this camcorder. You will not see any significant improvement in video quality as compared to the FXP mode (17mbps). Besides, using the MXP mode will not allow you to burn your HD movies into DVDR for viewing later in its native HD resolution because of the bit rate output limit of the DVD media. (You'll need to burn MXP (24mbps) videos in expensive BDR discs and burners for HD playback if you really want the highest quality which is practically indistinguishable from the FXP mode (17mbps)).
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Update: November 19, 2010

I would just like to add that this camcorder takes very good photos! I once forgot to bring my digital camera to a school event so I had to make do with this camcorder's photo options. I am impressed!!! The photos print nicely in 4"x6" up to 5"x7" for the typical family photo album. The colors are much better also than my Fujifilm F30 digicam's colors! Sometimes, if I don't intend to print photos larger than 4"x6", I just bring this HD camcorder with me and leave my digital camera behind as it does both photos and HD videos in one package. The built in flash makes good photo capture in low light possible!

I would also like to add that the 'trailing noise' which I and many users see in their HD videos when viewing the capture of this camcorder in their tv screens has MORE TO DO with the NOISE REDUCTION settings in their tv screens. DO TURN OFF ALL noise reduction settings as they tend to make the natural grainy noise of this camcorder (at high gain settings) become horrible, blotchy, trailing noise. Of course stay below 16dB AGC as much as possible. Buy a cheap external LED video lighting like those sold on ebay. (The 'CN 160-LED 9.6W Video Light for DV Camcorder Lighting' costs half the Canon VL-5 accessory video light and provides much higher light intensity: an impressive 100 lux illumination even at 10 ft or 3 meters away at half the price of the VL-5!)