Panasonic P2 Handheld Camcorder Understanding P2 Workflow: Avid Xpress Pro HD - Page 8

This indicates that you are indeed editing directly off of the P2 card.

Page 8 highlights

Select the media drive that your P2 card is in. Select current project . The media on that P2 card will appear in your Media tool. You can grab a clip and drag it to the composer window. Notice as you scroll in the composer window, the light flashes on the P2 card. This indicates that you are indeed editing directly off of the P2 card. Editing from this point is identical to editing any other media in Avid. 

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Select the media drive that your P2 card is in.
Select current project .
The media on that P2 card will appear in your Media tool.
You can grab a clip and drag it to the composer window.
Notice as you scroll in the composer window, the light flashes
on the P2 card.
This indicates that you are indeed editing directly off of the P2 card.
Editing from this point is identical to
editing any other media in Avid.