In iMovie 6, when you edit, it keeps a copy of both the before and after clip so you could undo the change if you wanted to. When you import a clip from another project, it imports the whole clip, so it is in both projects. Project sizes quickly balloon in iMovie 6. Back then, they did not worry about it too much because they assumed you would not keep projects on disk. Disks were too small back then. They assumed you would write out the finished project to tape and destroy your project, so they did not worry about the huge waste of space.
So the size of an iMovie 6 project is not related to quality. It relates to the iMovie 6 scheme for allowing an Undo function.
In iMovie's trash.
Non-destructive editing is an important feature of iMovie HD 6.
iMovie preserves the entire copy of every clip you place into your movie in case you change your mind at a later stage.
So, if you have cut out one minute from a 45 minute clip, iMovie will have stored two complete copies of that clip. This is why is helps to set import as 3-5 minute clips rather than one huge chunk. As DV runs at 13GB per hour your project files can get very big.
One workaround is to complete the editing of a section of the movie, then export that to Quicktime: highlight the clip/s, choose Share-Quicktime, turn on Share selected clips only, and choose Full Quality from the pop-ip menu.
Once you have saved the stand-alone clip to your hard drive, you can re-import it into your project using the File/Import command, and delete the original long clip/s from the project.