FCP 7 introduces a 3 new HD codecs for production work, ProRes 4444, ProRes 422 (LT) and ProRes 422 (Proxy). With these additions, this brings to five versions of HD codecs  available for production work. I did a simple comparison of Flip H.264 transcoding to all 5 versions, knowing full well that I wasn’t starting with the best source material.
The only version where I could see a difference was with ProRes 422 (Proxy). There were artifacts and a loss of detail. LT looked great, with no perceptible differences on up to 4444. Which means given the source, the best I could use is LT. That said, I did have striking differences in gamma between the new codecs looking identical to the source material and the “older” codecs, 422 and 422 (HQ) being much darker and losing details in the shadows.
I’ve tried to understand the gamma shift issue regarding H.264 and QT… this looks to add more confusion to the mix.
For me, going forward, Â I’ll transcode the Flip to ProRes 422 (LT) then use it in FCP. I still need to test using ProRes 422 (LT) in iMovie.