Hmmmm...
Are you sure the problem is in Memory capacity and not GPU?
Yes, I'm almost entirely sure. Because 1GB video card should be more than enough for video editing (as long as there is enough Memory). Most of the video and image editing software (for example: "Sony Vegas", Photoshop, "Power Director", Adobe Premiere, "Camtasia Studio" and etc) heavily depend on your Memory's capacity and it's timings (rather than on your video card's power and memory, or your CPU's frequency and number of cores, even though it's always better to have AT LEAST two cores in your CPU).
It is better to have much Memory with low timings, than to have much Memory with higher frequency, but high timings ("DDR3 1333MHz, 8GB, timings 9-10-9-28, 1.5V" memory will work quite better than "DDR 1600MHz, 8GB, timings 11-11-11-33, 1.5V" memory).
Which is better - AMD or Intel?
AMD's CPUs are much cheaper and they have much higher OverClocking threshold (meaning you can OverClock them higher), but (100% IMHO) their CPU cores are absolute crap and their CPU sockets suck major balls. Also, most of their processors are quite a lot of steps behind Intel (new technologies-wise). Even thought (since they change their sockets VERY rarely) their backwards compatibility is FANTASTIC and their Processor Integrated Graphics (APU) are a lot better than Intel's, I'd give them that.
Also, AMD has no "Hyper Threading" whatsoever, AT ALL...and this sucks quite a lot, because
"Hyper Threading" rules.
AMD does have "Multithreading" in their multi-core CPUs, but that's aren't the same thing as "Hyper Threading" technology, "Hyper Threading" is much MUCH better.
Intel has all the newest and best technologies, owns "Hyper Threading", their processors are a lot more effective than AMD's CPUs, even if OverClocked lower than AMD's CPUs (this is called the "Corn GHz Effect", it measures in that AMD's CPUs can be OverClocked much higher than Intel's CPUs, but even despite this fact, they still lose to Intel's CPUs in overall performance and quality even while being at much higher frequencies, because even the most fresh AMD CPUs has cores that are waaaaay too crappy and old compared to Intel CPU cores, even if comparing to the most cheapest Intel's CPU models. Simply putting: "Corn GHz Effect" is when Intel's 4-core "Sandy Bridge" i5 2500K EASILY beats AMD's 8-core "Bulldozer" FX-8120, if they are at the same OverClock frequency,
here is the clear proof), but they cost MUCH more (but remember, that, even though you pay a lot more for Intel's CPU than for AMD's CPU, you get a MUCH better processor, thus, even the high price are kind of reasonable - you pay more for a much better product), there is almost no backwards compatibility for Intel processors (almost all of Intel's lines of processors work on the different sockets, even though "Sandy Bridge" and "Ivy Bridge" are backwards compatible because they're both on the same 1155 socket), and their Processor Integrated Graphics (Intel HD) are still quite weak (MUCH weaker than AMD's "APU")...
Personally, I'd recommended getting Intel's Processor, but if you can't afford it/don't want to spend that much money on a CPU, then I actually suggest getting AMD's "Phenom II" processor, it's VERY good. Bulldozer is absolute fail and crap, and should be avoided at all costs.
I am a gamer and video editor, price under 500$.
Hmmm...I think
this combo would be quite good for you, and it's still quite affordable too (just a little bit higher than the cost you've estimated).
You can exclude the PSU from that list (don't exclude the case or anything else, you'll need it) and it would be pretty much at your estimation.
Everything else (except for OS, but that's for you to decide) you will be (pretty much) using from your last build (like video card, monitor, HDD and etc), so I didn't include that. Remember that you ain't building an absolutely new configuration from the scratch, you are just upgrading some parts in your existing build, so a new PSU aren't really a big necessity (but are highly advisable, for stability and to be safe).