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For example, when I edit 4K footage, I sometimes make sequence frame size 1920 x 1080, and put 4K footage into this timeline. Obviously, the 4k footage will be punched in, so I click "set the frame size...." option, and make the footage fit to the screen. And sometimes I can punch in a little on 4K footage if I want to have some closeup. And I export as High Quality 4K preset.
However, is this exported video still 4K quality even tho the sequence frame size is 1920 x 1080?
Is this way okay only if I want to export the video in 1080p? If I want to have 4K quality exported video, this isn't the proper way maybe??
When you edit 4K footage, the sequence frame size need to be matched with the 4K frame size??
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The vast majority of 'content' for professional use is still 1920x1080 ... so a ton of pro material is higher res clips placed on a 1920x1080 program.
TVs up-scale beautifully so you never ever realize it.
So ... it's your choice.
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You will have a better quality final export if your sequence is 4K.
In your case, Pr will upscale the FHD sequence at render time, it's the same as creating a 4K sequence, adding a FHD clip, upscaling to fit, then render a 4K final movie.