What are the downsides to working with Proxy Media?

My iMac is one of the more powerful ones: i7, 2 internal drives (the main one is a 256 GB flash drive), ATI Radeon HD 5750 w/1 GB VRAM, 16 GB RAM. But I notice that when I'm trying to apply multiple effects to a compound clip and then use crop to zoom on it, it starts dropping frames all over the place and barely plowing through.
I'm wondering if I should edit with proxy media. I know one disadvantage is the amount of space it takes to have both proxy and regular media, but I have plenty of disk space. I edit AVCHD footage that I optimize upon import.
I will also be doing a lot of multicam editing.
So I'm thinking proxy media is the way to go. But I have to wonder what the disadvantages to using proxy media are. For instance, since you're editing with a lower-quality version of the video, does that mean that when you do things like color correction you aren't getting a good a final result when you switch back to the regular media?
I'd appreciate any advice/tips.

JDLee wrote:
.... you aren't getting a good a final result when you switch back to the regular media?
no, the color correction is done with the 'HDef' material.
proxies is just a pre-view thing; esp. when doing multicam, the amount of data shoveling from/to harddrive is enormously ... theoretically, even a fw800 connected super-fast Raid can handle only a max. of 10 HDef streams ...
I'm on consumer/hobbyist level - handling here 4 streams from usb-drives - as proxies, no problem.
when editing is done, you switch back to original/optimized and export in shiny 100% ...

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