Best Streamclip settings for iPhone 4 Video - to edit in FCE

First, the problem: iPhone 4 records HD video in h.264. But Final Cut Express doesn't have sequence settings for editing h.264 or iPhone video clips.
The solution: I'm using Streamclip to convert all of my iPhone 4 videos to a format FCE lets me edit in.
Question: What are the optimal settings to insure that my final output retains quality almost equal to the original video shot on my iPhone? (More specifically, I plan on uploading to Youtube as a HD video).
I've read somewhere that I should convert to Quicktime Movie format, with Apple Intermediate Codec 720p 30fps. Is that the best compression type to convert to for editing iPhone 4 videos in FCE? If so, how should the other settings in streamclip be jiggered? For instance, does it make much difference if I set the Quality slider to 100% (As opposed to the default at 50%?) What about audio compression settings?
(P.S. I think it's very annoying that I can't directly edit a video from iPhone 4 on another consumer Apple product, the FCE. Does FCP let me directly edit h.264/iphone 4 videos?)

The slider makes no difference as AIC is variable bit rate within a specific range. No audio compression in FCE ever. Uncompressed stereo 48k, the video standard sample rate.
It would be truly miraculous if FCE worked with iPhone media as the current version predates it by three years, which in computer lifetimes is two generations, basically the equivalent of your grandfather having developed an app for a smartphone when he was a young man. FCP is a mere year old, well before the iPhone did video. Furthermore, if you'd read the forums, you'd see that H.264 is an acquisition and delivery forward. It is not used in production. The codec is not suitable for efficient production and really should never be used there. It's very unfortunate that camera manufacturers have taken the cheap way out and used this codec, rather than actually developing and using a suitable intraframe production codec.

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