Hi,
All video encoding methods using in codecs are lossy, which means the quality will drop no matter what settings you chosen while encoding. Although some codec produce result that without noticeable quality dropping with proper settings.
Encoding will happens when you generating a video file. To avoid exporting a VideoPad project more then once, you can make each pass in to a separated Sequence.
For example, you have two VideoPad Projects, and you want to export project 1 into a video clip and then use the clip in project 2 and then export project 2 into a video file. The better way to do this is: make project 1 in to a Sequence in project 2, we only export project 2 so the encoding only be performed once.
VideoPad allow multiple Sequences in one project. You can add a new Sequence from main menu "Sequence"->"New Sequence" or press "+" on the sequence tab. The latest version will also allow you to import and existing project as a Sequence into another project from menu "Clip"->"Import clips form another project". This a new feature and we still working on it. Please check out later versions for changes and fixes.
I hope this answers your questions.
Best regards.