Is it good practice to edit photos from the Photo Stream using iPhoto?
Edited photos in iPhoto on iOS is an interesting situation - one that there is not much documentation on, and one that seems like a one-way street. Photos can enter, but cannot "escape". You can edit photos, but you can't deleted Edited photos from the iPhoto app.

It is safe to edit your photos that are currently stored in Photostream without fear of losing them for good.* When you edit a photo, it is stored in the "Edited" album of iPhoto. Even when that photo is deleted from Camera Roll (if it was ever there), and Photostream (I have tested this to verify accuracy), it will not be deleted from the Edited album in iPhoto. 

There is no need to transfer these photos to your iPad before editing them.



*The only thing that I would be a little concerned about is if the iPad dies (prompting a restore), or the app gets deleted. It is very likely that if the app is deleted from a working iOS device, that the edited versions of all edited photos would be lost. Keep in mind that iOS iPhoto edits are non-destructive, so it likely comes down to a file that is saved somewhere within iPhoto that remembers these changes - how that works when the "Edited" photo is deleted I don't. Perhaps those photos are then saved in the app.

If the iPad is wiped, and then restored, iCloud should remember those edits, and with the restore, it should (this theory hasn't been personally proved) restore those edited copies.

However, both of these problems probably exist even if you transfer the photos to your iPad.