If I capture first via the HDD then transfer internally to BD-R or DVD-/+R does the material get re-encoded? If so, would capturing at the highest quality level avoid this?
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I am not familiar with this unit, so the easy answer would be check your manual (printed or on-line resource) for details. So with that, my best guess would be that if your capture is in HD and you burn to BD-R then it would not be re-encoded as long as you do not exceed the limits of the media. That means if your file is 30GB and you want to burn on a 25GB BD-R, then it will be re-encoded to fit. If burning to DVD-R and the capture is in HD, then it will be re-encoded.
The copy-to-disc function of this recorder is convoluted and quirky beyond the pale. Panasonic almost goes out of its way in the instructions to mask how the unit actually works.
Simplified in common English:
Everything gets recorded to the hard drive first, and always in "Full HDTV" DR-HD mode (i.e., highest quality recording speed that eats up lots of storage capacity). Anything recorded from the tuners gets captured as the actual broadcast stream: nothing is re-encoded.
You can copy these original intact full-quality recordings to BluRay discs only. You can fit roughly three hours onto a single layer BD-R or six hours on a dual-layer BD-R.
HOWEVER: the unit offers a confusing array of "recording speeds" called "conversions" that are very hard to keep track of if you start changing settings. If you change the "speed" of a particular timer recording to anything but the default DR-HD, the unit records it once in DR then re-encodes it to whatever speed you chose (deleting the original DR-HD recording afterward), which will save HDD space but drop the picture quality. If you want to always be archiving the original, untouched, un-re-encoded HDTV broadcasts you must be sure to only choose DR-HD as your recording "speed".
Regarding copies to DVD: these will ALWAYS be re-encoded, possibly multiple times if you aren't careful with the settings. You can fit re-encoded (but still near-HDTV video quality) called AVCHD onto a DVD disc, but capacity is limited. Normal DVD capacities of XP (60 mins) or SP (120 mins) will be downconverted from DR to the standard-def dvd spec. How this looks on a big screen depends on your reception quality and the performance of the tuner in your particular DMR-BWT720 (Panasonic had very erratic quality control in its BD recorder tuners).
If you want to keep things as simple and idiot-proof as possible, just make a habit of recording everything in DR-HD mode, and copy only that mode to only BD-R discs. Otherwise, you'll need to experiment with the settings to see exactly how much re-encoding you'd be willing to tolerate (i.e., HG-HD mode will give you 4 hours on SL-BD-R and 8 hours on DL-BD-R, HX-HD mode will give you 6 hours on SL and 12 hours on DL). This may be quite acceptable depending on the source broadcasts and your screen size. Downconverting to DVD-R will offer noticeably lower quality.