There are a million different Codecs used by a thousand different manucfaturers for creating video. I doubt there's any app on any system that actually supports them all. That said, depending on the actual model of camera (because, yes, Canon use different codecs on different models), it's quite likely that iPhoto can be extended. Alternatively, iMovie may be used to process the output from your camera to a format that iPhoto will work with.
So, what model is your Canon and what format(s) does your camera shoot?
All iPhoto does with video is catalogue and store it. Nothing else. It doesn't even play, just calls up the QuickTime player to view it.
No, iPhoto does not change or compress anything - video, stills - unless you tell it to.