This is correct, it's a cropping of the 4K sensor, so if you're shooting in 1080, the zoom is lossless. Most people are missing the point. The benefit isn't to help with editing, yes you can crop 4K and it's more flexible. That's not the point of the 2X zoom. The primary advantage is while you're flying you can zoom in to see thing BIGGER, lossless too!. It doesn't degrade the 720P image you are seeing in the screen, because the craft is cropping to 1080 image from a 4K image. The clarity in the screen is absolutely lossless, allowing you to see things CLOSER. This helps in scenarios where you want to be farther away, such as viewing animals so you don't scare them, people so you don't annoy them, or simply in areas that are too dangerous to fly closer. This is very handy when doing video inspections in 1080, seeing things closer. Many times you will see things you normally would have flown right by without noticing, this does happen. Last month I was shooting some rock climbers on the Flatirons, Boulder CO. It was quite windy and I didn't want to get too close to them, so I zoomed in so I could see them in my screen. It worked perfectly,
here's a link to see. Zoom works great, but you do want to edit out the moments that you zoom in and zoom out, because they are not smooth like an optical zoom.