Editing for multiple output formats

Sorry if this is a stupid question...I'm just getting started with FCE.
I'm working on a movie that I want to use in multiple places:
- HD version to play directly from computer onto HD display
- regular definition DVD
- web sized video
My source material is 1280x720 from a cheap HD camcorder, recorded in H.264-encoded quicktime, along with some other low-res video sources (320x240) recorded from still cameras.
I'm assuming if I want HD output in some cases, I need to edit that way...so in the easy setup I set the 720p AIC setting. Is this correct?
For what I want to do (multiple outputs including DVD), is it better to edit my HD material with the 720p AIC setting, or should I use one of the NTSC settings? I tried one, but it made my sequence play on-screen at 720x480 (I believe), and it looked quite degraded...
Help!

Aha...that explains why I have to render so often, which was bumming me out. Is there some way to make FCE transcode it into AIC or something else that it can edit more flexibly with?
You're right - bit rate is super low...but video quality isn't too bad for a camera which cost me all of $100. It's kinda cool - I don't have to worry about it much, and can just throw it in whatever bag I happen to be carrying at the time.
I uploaded a short sample clip here (complete with totally screwed up white balance!):
http://idisk.mac.com/gr2020-Public/FILE0001.MOV

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Editing for multiple output formats

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