Shouldn't it be "lengthens" instead of shortens?

Definitely set project properties to 29.97.

I'd be tempted to use C, with resampling disabled. You'll drop about 2 frames per minute which is probably unnoticeable. This will preserve the original speed, timing, and audio properties.

I suppose this script reduces the playback rate by 1.001 (30/29.97), so this is the best way.

If it is an AVI file, you can use the old hack utility AVIFrate and change the header to 29.97 (30000/1001). You put this into a 29.97 project and then Ctrl-Drag stretch the audio to make it the same length as the video that is now playing more slowly. Use Elastique mode (right-click on the audio) to render out the audio, if you are rendering it separately.

This thread discusses the script located here.

The script that JR wrote is awesome. JR wrote it for a need I expressed and it works perfectly. While it is not hard to do this change manually, this script lets you do it with the raw footage on the timeline, and even better, will ignore clips that don't need it.

Laurence, Sort of thought the script was the way. Please forgive my ignorance:
Project properties at 29.97? Bring in 30fps clip(s)? Activate script (sync won't be out)? Will only affect 30fps clips?

Yes, that's it. The only thing that isn't fully automated in the script is a couple of details in how the audio is handled. You want to make sure that the resample method in your project properties is set to "best" rather than the default "good", and you have to manually set it to choose the best élastique time compression method (pro instead of fast). Other than that, just run the script with your 30p clips in the timeline.

Which camera is doing exactly 30fps? There might be a firmware upgrade that fixes it.