Eh, yea... if you're using an editor that can use .vob files or avisynth scripts for source, it's far more efficient to go with those; otherwise you really should clip it down to what you're actually planning to use. I tend to work with lossless clips myself, but always in very limited amounts - in fact it helps you straighten out your scene choices before you even start editing if you already pre-clip the scenes.
Let's face it, you aren't gonna need all 2-something hours of FLCL footage for an AMV (I think the average AMV is about 3.5 minutes), are you?
