I didn't realize that converting to 16 bit tiff sacrificed data, is that a fact?
This is what HDRSoft says:
"The answer depends on your needs and preferences. If the quality of raw demosaicing/debayering or proper white balance adjustments are important to you, it is better to first process your bracketed RAW files in your favorite RAW converter, and then combine the converted TIFF or JPEG files in Photomatix. Additionally, Photomatix transfers less metadata when the source files are RAWs than when they are TIFFs or JPEGs.
When generating an HDR image, having Photomatix directly process the RAW files is theoretically better for the accuracy of the 32-bit HDR image produced -- the data in RAW files represent the linear luminance values captured by the camera sensors, which is exactly what is needed for an HDR image. Also, the calculation of HDR values can rely on the exposure information retrieved from EXIF data when RAW files are used.
However, the RAW conversion of Photomatix Pro and Photomatix Essentials is not as full-fledged and sophisticated as the RAW conversion done in Photoshop, Lightroom, Aperture, Bibble, DxO or other applications specialized in RAW conversion. Note that if you have Lightroom and Photomatix Pro, it is easy to integrate both processes with the free Lightroom Export Plug-In to Photomatix Pro.
Important note: When using a RAW converter with files intended for being merged into HDR, you should disable sharpening and uncheck all tonal and exposure-related automatic settings. That is, the Exposure adjustment setting but also adjustments for contrast, shadow and similar should be set to zero. This also applies to the Black setting which should be set to zero. "
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I suppose if you are using the RAW converter within photomatix to do the merging then you should convert to tiff first and that makes sense to me. I however use Adobe Camera Raw for raw conversion. There is a slight loss of information when converting to TIFF yes, however whether that matters to you depends on how picky you are.