There is no restrictions actually. However, in most cases a project starts from PrPro, where cuts are made. Then a particular clip (or a group of clips) from PrPro timeline is imported to AE so as to do some magic. If a composition is quite simple, one may rely on Dynamic Link. If they are complex ones, and rendering preview in PrPro takes longer than a few minutes, it's better to render digital intermediate out of AE and replace dynamically linked comps in PrPro timeline with those DIs...
Yes, normally you would start with Premiere Pro and do all the cuts, then do all the effects and compositing in After Effects. This makes it so you don't do and effects or compositing for things that will not be in the final result.
Ill get to it.... - we are finally reaching a point where we are happy with the footage we are recieving, so it is almost "GO -TIME!" :-)