Use ProRes/DNxHD/AVC-I/Cineform for standard HD resolutions; uncompressed or PNG/JPEG2K for other sizes.
– Uncompressed formats such as RGB(A), YUV, or DPX produce the best quality but generate very large files.
– The preferred approach is lightly compressed, 10-bit, all intra-frame, 4:2:2 or 4:4:4 codecs such as ProRes, DNxHD, AVC-Intra, or Cineform. These formats withstand multiple generations of edits. However, they are only available in standard HD resolutions.
– PNG and JPEG2000 image sequences offer lossless quality and compressed file sizes. There is some risk of color conversion artifacts from 8-bpc RGB color.
Another approach is to work with each sub-sequence individually within the same project, then nest them in a master timeline. (Premiere treats a sequence like a clip when it is inserted into another sequence.) This avoids the need to encode intermediate files. However, it requires all effects to be rendered during previews and final export.