When I bring in an MPEG 2 video file from a camera's SD card the file size becomes gigantic. For example, my 1.5 hour, SD, MPEG 2 file is around 3GB but when I bring it into FCP7 and then export it as a .mov ProRes 422LT file it ends up becoming 27GB. When I overwrite my clip into the sequence I let FC change the sequence setting to what it thinks is best.
I don't quite understand why there is such and increase from the original 3GB. Can someone shed some light?
It's all about compression. You can wiki video compression and learn a lot about the different format and compression scales that go along with the different codecs.
Short answer, MPEG 2 is very compressed. Actually about half of the frames of the video don't exist for MPEG. The frames get reconstructed when it's playback. This is very good when you're trying to fit video onto a DVD, but very bad when you're trying to edit. ProRes is a very high quality codec, so it tries to retain as much info as possible to make the video look better.
When we render out to ProRes, we're averaging about a GB per minute, so it eats up a lot of storage space. It's best to leave the video in ProRes until you're ready to export for DVD, Blu-Ray, or Web, then you can compress back to a smaller file.