[MacDV] OK to keep clips on ext. HD?

[Brian Olesky]

I have about 30-35 hi-res DV files (approx 100 MB each) that I need to use
to build reels in iMovie, which will then be burned to DVDs via iDVD.

My question is, do I have to have those clips taking up space on my internal
HD, or can I just store them on my external HD, and keep the external drive
hooked up when I'm working on the projects?

Also, when I had the files made, they were given to me in two formats: DV
and AVI. Am I right to assume that the DV versions will work best for me?

Thanks,
Brian