You're right; a lot of professional video editing that utilizes high resolution or heavily color corrected footage will first be rough cut with low resolution proxies, only substituting the full quality footage for final assemblies.

Back when REDs first came out, there was a lot of buzz from amateur and student editors who could get 1080/720 proxies of their freshly shot 4K footage almost instantly and hand it off to editors before production even wrapped. This had been the standard for many professionals doing off/online editing for a while, but getting access to that workflow for relatively cheap was the new, cool thing.

That's exactly how it's normally done - the offline editor works with low bitrate HD files, then gives the edit list to the online team who re-conform from the full resolution stuff.

There's always an impetus to get higher resolution and quality at the offline stage though, as people get used to improving technology. It wouldn't be outrageous to have a 4k offline now, because people with 4k TVs at home will say "Why can't we? I want to see everything!", even if it doesn't particularly enhance the editor's work.

It would still be done with lower bitrate files, because original 4k material from digital cinema cameras is beyond what most machines are happy with.

I would imagine that color correction, or anything involving pixel masks, would require full resolution. Cutting scenes and stuff might not, but I wouldn't be very surprised if there were cases when not having the full resolution would bite you.