With the latest versions of iMovie you can store the imported footage onto an external drive. Where you place the original clips is up to you.
In the Capture window under the "Save To:" drop down menu you can choose the drive to save the imported clips to.
Storing footage on an external is a great idea to keep space free on the internal drive... also if you're using a firewire 7200rpm external drive then you shouldn't notice any negatives.
Of course the negatives are if you lose/don't have access to your external drive!
What do you mean "can I download a DVD edit back as an Event"??
When you create a video DVD, the format of the video is compressed and encoded to DVD-Video spec so it can be played back on any stand alone DVD player.
... or do you mean you have the quicktime movie files stored on a Data DVD? If so - then NO! DVD's have horrendously slow read times compared to an external hard drive. There are plenty of other issues with using a DVD as the main storage - sure backup the files there - but don't try running them directly from the DVD.
Hope this helps