To answer your question 'Does it even matter that I save the Image in it's original format?' explicitly: Yes, it does, but in a negative way.
When you load the image, it is uncompressed internally to a bitmap (or as ChrisF calls it, an uncompressed data stream). So if the original image used a lossy compression (for example jpeg), saving it in the same format will again result in loss of information (i.e. more artifacts, less detail, lower quality). Especially if you have repeated actions of read - modify - save, this is something to avoid.
(Note that it is also something to avoid if you are not modifying the picture. Just the repeated decompress - compress cycles will degrade the image quality).
So if disk space is not an issue here (and it usually isn't in the age of hard disks that are big enough for HD video), always store any intermediate pictures in lossless compression formats, or uncompressed. You may consider saving the finall output in a compressed format, depending on what you use it for. (If you want to present those final pictures on the web, jpeg or png would be good choices).