Dan,
I believe you are right about the uncompressed project, however, if he does DV (and this is what I would do) exporting directly to Compressor is the way to go. This prevents the DV compression so graphics look great. It also creates automatic compression markers on every cut, so motion is flawless. Finally, control over encoding in Compressor is superior to letting DVDSP do it, and at least until v2 Compressor was faster.
True, this method does tie up FCP while the encoding is going on, but it’s worth it.
A workaround is to go with an uncompressed project like you said, render a movie, and use another app like Compression Master or Squeeze to handle the encoding (again, way more control over encoding than DVDSP) in which case you can be happily editing away in FCP.