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Play nice kids.
When I need to create sub-project files that have good quality that I can edit (read little or no compression) I usually choose AVI for SD and MOV for HD.
For final disc output, for SD (DVD) it’s MPG and for HD (BD) it’s M2V, with AC3 for audio for both.
for the web, I don’t render out using H.264 directly but use QuickTime pro to create my videos (MP4 with H.264 for YouTube & Vimeo).