Thanks for the clarification, Michael- so is it more of a performance thing than a quality/result issue? So far working like this I have noticed some slowdown but nothing that makes it too hard to work.
This way of working is extremely convenient since my clients often come with a hard drive full of media and I can link, edit, and export all before they leave without having to wait for imports/transcoding. That being said, I wanted to make sure I this method wouldn’t come back to bite me later on or result in a loss of quality.