H.264 and prores proxy question

I've read through a ton of posts about proxy and h.264 workflows but didn't find any that answers my specific question.
My raw video from my camera is mp4 (h.264). I understand that h.264 is not good to edit with, so I have a few options. I use a macbook pro for editing so I have been toying around with prores proxy for editing and it makes a difference on RT playback and rendering while editing, so that's good. When I get ready to output my movie after editing, I relink my project back to the original h.264 source files and that seems to work fine.
I'm wondering if that's not the right workflow though. Should I transcode the h.264 into prores HQ or LT and then ALSO to proxy, edit with proxy and then relink my project back to the HQ or LT files to output? Or is linking back to my source h.264 files and outputing the right way to go?
Since the original files must be in the best possible quality that I'm going to get (since they're my original clips), I assume that relinking to them right before output is the way to go but I really don't know much about codecs to know if I'm missing something.
Thanks in advance for the advice.

Thanks for your response. I'm shooting with a Sanyo FH1, mostly in 1080p, but I've scaled back to 720 since 1080 was overkill for what I'm doing to save some space.
The thing I don't quite understand yet is the issue with pointing my project back to the source files after all the editing is finished with prores proxy and just before output. That way, FCP would only have to uncompress the source files to render for final output only one time (besides the initial transcoding), albeit, probably longer than it would be for prores. I'm sold on proxy because it was so much faster to edit with than h.264 and I didn't have to keep any video files after I was finished except my source files....trying to budget hard drive space. I transcoded one file a while back to prores but the file size was more than I wanted to deal with since I only edit on my macbook pro so I didn't try to edit with it. Like you said, maybe just converting to prores and dealing with the space juggling would be the best way to go, or try prores LT to see how the quality is.
Does converting from h.264 to prores buy me any quality or a better final result, or just a cleaner workflow? Don't misread my questions, I'm not arguing, just trying to understand from you guys that know a lot more about this than I do. Making my living as a developer, it's just ingrained in me to understand this one
Message was edited by: kenmoberg (updated macos version)

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