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If you are happy with the results, it's probably good enough. AE's pixel interpolation isn't exactly the best in the business, so you may want to try a third-party tool such as Instant HD or ReSizer to see if they give you a sharper up-scaling:
The second question sort of answers itself: "Is 10:1 compressed material as good as uncompressed?"
Of course not, but Avid's DNxHD codec has a good reputation and is cross-platform unlike Apples ProRes 4:2:2. For final delivery a DNxHD compression will be fine, but I'd avoid compressing your master before handing it to color correction. Only compress right before final delivery and keep everything lossless in your production pipeline.
If you compress the hell out of the master you will likely see a lot of artifacts after the Da Vinci has graded it. Talk to the Da Vinci artist and see if you can deliver a 16-bit TIFF sequence or something similar.
- Jonas Hummelstrand
FYI for anyone wondering in the future, this is what my Da Vinci artist said:
"At my day job, doing HD spots for Sony Pictures (who are very particular about picture quality), the editors are also using Avid's DNX compression. The settings they are using (at 1080 lines) are: 175X for 23.98 and 220X for 59.94. We've run tons of resolution tests and the clients find this acceptable quality for big media buys (Superbowl, American Idol, etc.)."
Another said that if my original content was film he would go uncompressed QT, but since it was P2, DNxHD 175 is the way to go.
And this article (now a year old) evaluated DNxHD vs ProRes422 and Uncompressed.....
As a control, I used Apples Uncompressed 10-bit 4:2:2 codec. I rendered the animation to the ProRes 422 (HQ), ProRes 422, Avid DNxHD 175, Avid DNxHD 115, and Avid DNxHD 36 codecs. (Note: The DNxHD flavors are specific to 1080/24p format video. The 30i versions would be DNxHD 220 and 145.)
After re-importing the results in After Effects, I placed each file in a composition along with the Uncompressed 10-bit 4:2:2 version and used the Difference transfer mode to illustrate where the compressed image varied from the uncompressed. The results were quite surprising.
The DNxHD 175 files difference from the uncompressed was barely visible to the naked eye, but the ProRes 422 (HQ) codec showed significant differences. In fact, in my test, the DNxHD 115 codec also outperformed the ProRes (HQ).