Yes, definitely makes sense! :) I believe that iMovie does create a new video file, but Final Cut doesn't. It also makes reference files. However, when I started vidding I was severely warned that Final Cut would be extremely unhappy if I tried to use source with a lossy codec. I actually did recently try importing clips with H264 codec and found that playback was nigh impossible, even after rendering. So I imagine that would be the case with the original source codec (x264, in this case. Not to mention that they're MKVs, which I don't believe FCP handles well, if at all.) Still, I know thingswithwings edits clips with H264 in FCP but it didn't work for me. :(

So yeah, I convert my source files -- movies or episodes -- into clips with a not-very-lossy codec (there's gotta be a word for that), where ~20 seconds of footage is on the order of 100 Mb. It would definitely take up too much HD space to do an entire season of television this way, though I might be able to get away with a movie since I've upgraded my HDD. :(

I guess current-day television is so pretty that there's no need to do the really low-compression clipping to have a shiny vid at the end! But with slightly older source such as Buffy, which I still vid, it could be an issue, even vidding on a different platform.

Are there limitations on the types of source you can load into Cinerella? Can you do VOB? MKV?