After all the film is shot and processed, a scan or telecine of all the footage is made and the whole film is then edited digitally. Then a digital readout of all shots/frames in the final cut is created (I forget what this is s called), and this is used to assemble the film from the finished negative. Then there is photochemical color timing and so on.

My final digital master would be from a theatrical show print (either 35mm or 70mm based on the negative format) in order to retain the filmic qualities that I enjoy in digital transfers.

EDIT: Darn it Ash!