1. *.MLV cant be imported in editing softwares for editing?
2. Would not converting mlv will result in generation loss? and kills the purpose of shooting Raw?
3. What is DNG file extension? i.e if ML is creating MLV files then where is this DNG file extension coming from?
1. Yes: MLRawViewer, MLVProducer, MLVApp
2. Convertion to DNG is lossless. And if you don't change image parameters after processing, you don't loose quality in other formats. So if you "just cut" processed footage, all is fine.
3. DNG is just another RAW representation. MLV is comming from MagicLantern. DNG is a standard coming from Adobe.