How far does iPhoto preserve the RAW file when editing?

Question

I'm trying to get a better understanding of how iPhoto handles RAW photos and hope you'll answer a humble, possibly misguided question:
How far through the editing process does iPhoto preserve RAW data?
Here's what I mean by this: I understand that iPhoto cannot "edit" a RAW file, but there are a couple of ways it look like it was. Let's take a WB adjustment as an example.
Option 1: "Convert on import." iPhoto converts the RAW to a JPG when I import the file (or begin to edit it). Then adjusting the WB will be a filter applied to a JPG file (meaning there wasn't much advantage to shooting RAWs in the first place)!
Option 2: "Fully RAW." iPhoto imports the RAW file and then "processes" it whenever you display or print it. When you edit it (e.g., adjusting the white balance), it keeps track of the new parameters (e.g., WB, or contrast, or cropping, etc.) and then uses these parameters the next time it processes the RAW for display. This would mean, for example, that there would be no difference in quality between
A. Taking a freshly-imported RAW and setting the white balance to X, and
B. Taking a freshly-imported RAW, setting the white balance to Y, closing iPhoto, re-opening iPhoto then editing the picture again and changing the WB to X.
Option 3: "Somewhere in-between." Files are imported as RAW, but then converted to JPG at the end of the first editing. Subsequent edits are treated as JPG edits (including the resulting loss in image quality with each edit).
Can anyone clarify this? How does the answer differ for different types of edits (e.g., WB vs. image rotation vs., expanding the highlights, etc.)? Is the answer different for Aperture vs. iPhoto?
Thanks!
-Mike

Answer 1

How about the 4 th option... None of the above.
Option 3 is closest. As the Help says:
When you edit a RAW-format photo and click Done, iPhoto applies your changes to the RAW image data and stores the data as a JPEG file (the original RAW file remains unchanged).
It can also be saved as tiff is you prefer.
Here's where it's different from your option 3:
Subsequent edits are treated as JPG edits (including the resulting loss in image quality with each edit)
There is no loss of image quality with each edit because of iPhoto's _[Non-Destructive Editing Feature|http://docs.info.apple.com/article.html?path=iPhoto/7.0/en/11464.html]_ .
You can, of course, re-process the RAWs if you choose. This will bring you right back to the Original file.
Aperture is quite different. It's at your option 2
Regards
TD