Yer, shouldn't be a problem. This is the method I've had to use to edit some footage from a MicroMW camera - only way I could capture was to MPEG, the I converted that to AVI DV to edit (I get annoyed trying to edit MPEG), then back to MPEG for the DVD. I'm by no means an expert, but theoretically the MPEG to DV AVI would be lossless, so you'll only lose quality in the conversion back to MPEG after editing (and then not much!)
As I say, an expert would probably say, "ah, but...", but to be honest, if if the picture looks perfect, it is perfect
