Our final output is to Blu-ray DVD
Blu-ray and DVD are actually two different things. Blu-ray is the newer format, DVD is the older.
I'd recommend the UT codec. It's lossless, so the quality will be there. And if you use the YUV 422 option, the file sizes can be quite reasonable. (Just be sure to install both the 32 and the 64 bit version of UT. They're separate MSI files.)
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Anything lossless--even just visually lossless and not mathematically so--is going to be massive. So what about a proxy workflow?
Encode to QuickTime with something like PNG or MJPEG at your final dimensions and framerate, but really crank down the bitrate/quality settings. This will give you a not-great-looking-but-rather-small file. They'll work well in Premiere for editing. Then--since DL is broken for you--also render out a full-resolution, uncompressed version from AE, naming them the same as the proxies but put them in a different folder. Take the proxies offline (with Premiere closed), and when you reopen the project, point them at the uncompressed versions. When you export, you'll be using the best quality source, but while you're editing in Premiere you won't be hampered by slow performance with the uncompressed files. Until you can figure out why DL isn't working for you, I think you'll find that this would give you the best of both worlds.
PNG itself is a lossless compression standard. Can you really change anything about it to 'degrade' the quality and save file size?
Whoops--typo. Good catch. Meant to say 'Photo JPEG'...
You can change the bit depth of the PNG exporter from 24-bit to 8-bit, and that decreases filesize rather significantly, but the files are still relatively large when comparing to P-JPEG or M-JPEG. PNG makes a good lossless export, though.
I'll echo the folks suggesting PNG as a lossless codec for intermediate work. It's a bit processor-intensive, but it's nearly universal, the compression is twice as good as Animation, and it can hold an alpha channel.
(I have nothing against UT. It's just not as good for interchange with other folks, who might not want to download something new.)
The drawback to PNG (for me at least) is that it requires QuickTime to do so. You can't create an AVI using PNG. You can create UT AVI files.
And unlike QuickTime, UT doesn't seem to interfere with anything on the system or present it's own issues into the mix of things.
And it's a native 64 bit codec, unlike the QuickTime wrapper which needs special handling to work inside of PP and AE and which can sometimes go wrong.
If you don't have to work with anyone else on any other system with any other operating system, Ut is fine. But if you need to be cross-platform or platform-agnostic, QuickTime is the way to go. AVI support on Macs is pretty limited; MOV support on PCs is pretty broad.
And I work with QuickTimes on literally a daily basis, with a mish-mash of codecs, and I don't run into any of these mysterious issues which are commonly alluded to. I've got 6TB of DVCPRO50 MOVs sitting on an external RAID right now that I cart back and forth between my PC PPro system and a producer's FCP system, with nary a problem. The only way I could make this current project work was to use QuickTime.