Reading andrew's blog, he wrote that the h.264 is a delivery format and should not be used as an intermediary format when editing. Was surfing the net and came across an article about Canon 5D Mark II that it shoots video in h.264 format. Does that mean the footages from this camera is not good enough for editing and is lossy?
h.264 is a lossy codec, however the footage from the D5 is steller to say the least.
The problem is that there is SO MUCH data packed into each frame that most computers simply cannot decode it in real time. At least, After Effects has a lot of problems decoding it on my computer (3.2 GHz Quad Core with 16 gigs of RAM).
I personally use NeoScene to convert my footage to QT MP4 for editing.