I'd be wary of how many times you re-use your digital tapes.
In broadcast work, re-using tapes is done very few times, due to signal-to-noise problems as tapes are re-used, and as they age. This was as true of analogue as it is of digital.
For analogue broadcast master tapes, every pass through a tape machine was logged, and after a certain number of passes the tape was scrapped. Metal tapes are abrasive, and the head-drum of a Betacam SP unit (say a Sony BVW-75) slams the video head into the tape at a pressure approaching 1 tonne per square inch. Only the boundary layer of air between head and tape prevents massive tape damage. Machines in heavy service (on-air machines) were fitted with sapphire blades in the tape path to physically scrape the tape surface and remove any dust or particulate contaminants to prolong head-drum life. Biggest damn sapphires I've ever seen, they looked like like small chisels!
The situation isn't all that different with digital tapes, but instead of signal-to-noise problems, you get error-correction problems, where errors begin to multiply to the point where the error-correction algorithms are unable to cope - and a pixellisation (or "blocky" )artifact rresults. The audio can also glitch (usually a click) at the same time - or possibly later - since audio and video are multiplexed together and then written to tape in a scrambled manner to minimise the effects of slight tape damage in any one area by (hopefully) spreading it throughout the frame instead of displaying it in a single line of the scan.
OK, so you decide to re-use your digital tapes. Now, if you keep going through the process of going from DVD back to AVI and then do your editing, then re-rendering to MPEG to burn to DVD, the pictures slowly but surely degrade. One problem is "quantisation noise" and it's inherent in digitisation of video. I did a production recently where I had three generations of DVD on the finished cut - and the noise on playback was so objectionable I went right back to camera-tapes (shot with a Hitachi 3-chip Z*ONE DA digital broadcast head with Fujinon 14X EFP lens) and re-cut the whole thing from the start.
The end result was significantly cleaner pictures when the final DVD was played back, so the effort was well worthwhile. I am fussy about picture quality because I charge money for it.
How many generations you can go depends entirely on what image quality you are prepared to put up with. My clients pay for clean pix, and that's what they get, even if it means I have to go back to the beginning and re-cut the whole production. If I have a rough-cut to work from it can be a very fast process, and you get to tidy up anything you were less than 100% happy with, especially audio-wise. Audio is 10% of the shoot and 90% of the problems in the edit-suite.
If you get the impression that digital video isn't without problems, you are quite right. In the early days I well recall a salesman saying "you can have up to fifty generations of editing without loss of quality" whereupon I replied "If my editor needs fifty generations of editing to achieve an effect then I'll be looking for a new editor!". He didn't see the point.
Never lose sight of the fundamental truth of digital video:- "Going digital is the end of all your old problems - and the beginning of all your new ones, and some of them are worse than the old ones!"