Ogg Theora is not only an excellent distribution format, but it can also be edited. If you have a GNU/Linux machine with enough memory and computational power, you can explore editing software like LiVES (http://lives.sourceforge.net), PiTiVi (http://www.pitivi.org/), Kdenlive (http://www.kdenlive.org/), and Cinelerra (http://cinelerra.org/).
At this point in time, for simple editing of Theora files, PiTivi and LiVES are the best options. Kdenlive often crashes when exporting to Theora (and the output file is incorrectly formatted), and Cinelerra is difficult both to install and to use.
If you use Ubuntu then PiTiVi is an even better choice since installation is very simple. In addition PiTiVi is built on the GStreamer multimedia framework (used by Ubuntu), so you can import and edit pretty much any media file supported by GStreamer (which is a lot), and export to Theora.
LiVES and PiTiVi work like most editing software: they decompress the video files in the process of importing the video data into the editing software, so you can view and browse through all the images and sounds, rearrange them and do all kinds of cool stuff. When you finish, you re-compress the new edit by exporting the resulting arrangement. This process of de- and re-compressing comes at a cost, as you lose a little quality with each de- or recompressing process that you run. That's why you call this editing process lossy editing.