“why in the world would anyone convert all of their footage before putting it into FCP if you could just export it out of final cut in the desired codec?”
Because H.264 is not an editing codec. Most of the time you will run into editing problems. You were lucky that you didn’t run into any issue while editing.
“Since I lost quality going from h264 to prores 422 hq- can I get that quality back in the end?”
You didn’t lose any quality. Also you shot in H.264 not Bluray