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Thanks again I didn't understand what the shadow files were doing exactly. I was giving my best interpitation of all the forum posts and some internet searches I have been doing. And now I see how I was not clear when asking if I could edit in HD. While now i understand I am sampling the hd fliles to enable editing to flow... Yeah
Shadow files, when selected in pref, are generated anytime a HD video is import into the media library. It will be annotated with a orange movie strip icon in the lower left corner of the clip when this lower resolution timeline proxy file is being generated. The icon in the lower left corner of the clip will change from orange to green when complete. It's generally advisable to make sure you have the green status prior to actually moving the clip to the timeline and start editing. Although not mandatory, waiting generally provides a more satisfed editing experience. For long duration clips this can take a while depending on compute capability. The generation process at PD14 is CPU capped so the generation does not entirely pull down a lower end compute platform.
For the NTSC pref setting, these proxy files are MPEG files with a bitrate of ~6-8Mbps depending on source and a framesize of 720x480 for 16:9 source. MPEG because it has fairly low CPU playback requirements compared to other codecs like H.264 so allows rather complex timelines to playback fluidly.
When you turn these shadow files off for a edit session, then one is working with nearly source resolution files in the timeline which can cause playback hickups for complex timelines and high quality clips or when significant "corrections" are added to a clip. One or two clips in a PIP type fashion usually no playback problems for a higher end compute platform, a PIP video wall of 9 hgih quality clips, usually a issue for about any platform.
As mentioned previously, other options also exist to enhance playback fluidity depending on what fits one's workflow, manually generated proxy files, intermediate codec editing files.... to name a few.
Jeff