Yeah, and that edited copy is like twice compressed. Well, it's uncompressed, edited on, and then compressed again........erm, or something like that. Either way it's not good. Don't go back and make small edits too many times.
iPhoto uses some sort of black magic to compress the originals into the thumbnails. However the originals remain untouched when they are imported from your camera.
All JPG files are compressed. iPhoto writes JPG files so therefore it writes compressed files. But iPhoto does nothing different then other programs that write JPG files. iPhoto can also work with formats that are not compressed. It can read RAW format images and write TIFF files.