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Is re-encoding an mp4 bad?
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Yes, from it being a format that compresses between the frames with a shallow peak signal noise ratio to likely having a low bit rate, you're looking at compression generation loss.
Transcode it to ProRes 422 LT (ProRes 422 Proxy if you're really tight on storage space) and then edit in a Sequence with the Video Previews set to the same ProRes settings to minimize the issues.