Yes, you are losing quality,
When you export your timeline you will have to re-encode to MPEG-2. So are taking a second hit of MPEG compression.
Editing breaks the original GOP structure. No way around re-encoding, if that happens.
I suppose its possible, if you edit precisely on GOP boundaries, and stitch the files together..there are some high end authoring utilities that can pull that off..but that’s a different animal than editing in an NLE like Premiere.
The only way to avoid quality loss is to edit the original assets and not the DVD files.