Both of them re-encode the material. I’m not familiar with the software you are editing with, but with Avid, Final Cut, Premiere, etc…this is not an issue…
You are correct that to upgrade the firmware on the HPX500 is done by SD card ( go to https://www.panasonic.com/broadcast to download firmware). I have had mine for 4 1/2 years and the last upgrade notice I got was a couple of years ago. When I bought the camera I got the R series cards but I have used E series cards and they have worked perfectly.
Cheers, Philip