Test 1
My source video is a DV-AVI it's a very high quality source from a Canon GL2. I encoded the AVI directly to both 8000CBR and 3000CBR MPEG's. I also reencoded the 8000CBR to 3000CBR. I'm using Ulead MSP using basic templates with the exception of the bit rates.
Here'a a screenshot of the DV-AVI:
The DV-AVI>8000CBR MPEG, notice the edges of the center light produce a little macroblocking. Very little and would be imperceptible when it's playing:
The DV-AVI>3000CBR MPEG , Lot's of macroblocking as expected:
The DV-AVI>8000CBR>3000CBR, a real lot of macroblocking:
As you can see the the DV-AVI>8000CBR>3000CBR shows signifgantly more macroblocking compared to the one encoded directly from the AVI. Encoding from the best source always produces a better result, if your just cutting and trimming the ends, adding a few transitions and most of the video doesn't have to be reencoded that just may be the way to do it. It's definitley faster. Personally I'm a perfectionist and prefer to have the highest quality video I can get.
Here's links to the videos (10 Secs.) the example frame above is at 7 secs. 2nd frame:
Right Click and select "Save As"
4MB 3000CBR from AVI
4 MB 3000CBR from MPEG
10MB 8000CBR
36MB AVI
Test 2
I Did a little more experimenting. I took my DV-AVI source and created a 6000VBR MPEG to be used as a source file. I split the AVI source in half and did a 4 second crossfade, so we have 1 second on either side with no cross fade. I then created a 6000VBR MPEG from the AVI.
I then did the same thing to the MPEG that I'm using as a source file. Here's the results.
The MPEG encoded from the AVI:
The MPEG encoded from the MPEG:
If you focus your attention on the light to the right you can see a slight difference. Is it huge difference? No not really, but with the combination of high quality 3CCD cams coming into the consumer market and TV's becoming larger and larger any quality loss will be noticeable.
Here's some close-ups, notice the right edge of the blue light:
The MPEG encoded from the AVI: ---- The MPEG encoded from the MPEG:

The clips themselves (4MB each):
MPEG encoded from AVI
MPEG encoded from MPEG
The clips themselves (4MB each):
MPEG encoded from AVI
MPEG encoded from MPEG
