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So, what are your options? Cedar is, indeed, a long lasting wood of good quality for outdoor use. Set your cedar posts in holes that are at least 6" larger than the post diameter, and set them on good bearing. If you can't reach good gravel that can be compacted well, then place a good size flat stone in the bottom of the hole. Set the post on the bottom, or stone, maintain plumb and straight, and backfill the hole with good free draining gravel or crushed stone almost to grade. Backfill in 6-10" lifts, and compact each lift as well as you can before adding more backfill. That will make the backfill quite stable. If you use crushed stone, don't use anything larger than 1/2", and don't use washed crushed stone. The dust and particles from the crushing operation will help "bind" the backfill together. Both the gravel and the crushed stone will be free draining enough to allow water in the soil to drain away from the posts.
Alter Eagle Construction & Design