Working with .avi files in FCP

Hello guys,
I have a challenge.
Friend of mine has .avi footage, codec is DV PAL 720x576 at 25 fps.
I need to edit it in FCP 6 and create video for YouTube.
What would be the best way of doing this?
Should I leave it in DV PAL 720x576 at 25, edit the footage in this codec and frame rate and export it as it is?
Or should I set Timeline settings to DV NTSC 720x480 at 29.97 and export it as that?
Or any other codec, like H.264?
What would be the best way?
I don't want the video to be stretched into HD on YouTube or anything like that. Just simple, most effective way without loosing much quality.
Thank you so much for any tips.

Hi Michael, thanks for your note.
I actually do not need to have 24 fps, I just thought that it will make a better performance on YouTube.
But if it doesn't make any difference, then I gues 25 fps is fine.
So in that case, all I need to do is to export my DV PAL sequence with current settings and then convert it in Comperssor to H.264/
So I will end up with H.264, 720x576, progressive, 25 fps ? Is that correct?
Thanks again Michael for your support.

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