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Thats the way AE works, sorry - strictly one footage element per layer. Your colorist's suggestion sounds like a good workaround to me.
As Andrew said - "as designed". AE is layer based (which is what you see), not track-based. Editing and trimming stuff to AE merely means that you cut off a layers visibility or content for processing, beyond that there is no relation of the temporal layout of elements on the timeline per se. Nesting is advisable of course, but if you are on CS4, you should also consider actually linking your Premiere project via Dynamic Link. this will keep it all in one layer per sequence. You'd still have to render the result and replace the modified clips in Premiere, but it may provide a slight improvement, even more so, as it would update any last minute changes you may make in Premiere when you open the project this way in AE....
Did you see Stu Maschwitz's ProLost blog post?
An editor at work was using our Avid to do a grade on a short promo and I
wanted to see what I could do in After Effects. So when he was out of the
office I exported the timeline as an AAF and copied the OMFI media. When I
brought the project into After Effects I ended up with a massive number of
layers and freaked at first at the idea of doing anything with it.
However I thought about it again and decided to precompose all the layers,
as this gave me just one layer to work with. I then added a couple of
Adjustment Layers above it; one with a Levels effect added and the other
with HSL. I also added Masks to the Adjustment Layers so I could vignette
The key to working like this was to use Hold Keyframes at the beginning of
each new shot for each effect, Mask Shape and Feather. I could then adjust
that shot, scrub to the next shot add new Hold Keyframes adjust that shot
and so on. When I wanted to repeat any effect settings on a shot, I just cut
and pasted the relevant keyframes. Mixes across shots can be tricky but you
can always go back to work with the original shots on their separate layers
if you need to.
I ended up with a quick grade that stood up nicely against the one done on
the Avid and I only had work with 3 layers on my timeline!