I haven't done actual editing, but I've done a fair bit of critique and review. I think the issues are pretty much the same.
Standard proviso: everybody has their own system. Of writing, of reading, of editing. Obviously your system isn't "wrong," even if nobody else does it; nor is it "right" merely because you may find that everybody does it. But that's not what you're asking, so I'll assume this point is obvious :)
Here's my take: the first read-through is crucial. That's how pretty much everybody is going to be reading it, after all, so that's the experience you want to polish, refine, and make absolutely perfect.
- What you're saying, in your question, is, "The first read-through is crucial, so it's best to set down my comments and reactions to that, and not rely solely on reactions to subsequent re-reads."
- Your friend, on the other hand, is saying "The first read-through is crucial, so it's best to read it in the most pure, receptive manner you can - and constant commenting and critiquing will not enable you to get the real first read-through experience that a real reader would have."
- My own opinion, in a nutshell, is that you're absolutely right on this one - but you should keep your friend's point in mind.
In other words (and in more of them): your technique of marking reactions during your first read-through is (IMHO) spot-on. Your friend perhaps does not understand how difficult it is to re-capture those initial reactions of yours, or how important they are to the editing process. Your friend also might not appreciate that an editor's job involves, in a very real sense, the ability to read critically and for enjoyment in the very same reading. You have to: your criticism is meant precisely to make the book better, more powerful, more enjoyable; how can that skill be separated from your ability to feel the power and enjoyment in the book?
On the other hand, that being said, it is harder to enjoy a piece when you're also trying to fix it. In my experience, that first pass is an attempt to capture your response to the book - not to fix it, or to make any suggestions on how to deal with it triggering those responses. Those are things you can do once you've finished the first read-through. And anything critical (and certainly active editing suggestions) that can wait for later, probably should.
So, for example, "Dude! It's been 100 pages since you mentioned Blandings Castle! WTF?" would be fine, if that were your reaction, whereas "It's been a long time since you've mentioned Blandings Castle - is this really necessary? If it is, maybe you could at least give some ominous hints to what's going on there - maybe as news from the water girl in Chapter 17!" would probably be pretty far out of I'm-A-Regular-Reader Zone. That's what I'd take from your friend's opinion: capture your reaction; leave "what to do about it" for later; don't break into full-out Editor Mode.
What's really nice is that as an editor, you can jot down your most cryptic, frustrated, mocking comments - the same ones you have reading any book! - without needing to explain yourself. You don't need to phrase your reactions as helpful comments, or even as intelligible comments. You just need enough to get a good sense, when you are writing your comments to the author, of what needs to be addressed - from the fresh-reader's perspective. Because you've got your own, all jotted down.
You asked about my own technique; it sounds like it's something similar to yours.
- I make a first pass with my most initial reactions - usually as comments right off the text.
- When I'm done with the piece, I write a long response, detailing my macro-level comments, addressing any concerns that repeated a bunch of times, and going into detail for micro-points that require it.
- Then I go back to my initial reactions, and I edit them into clear, helpful micro-comments for the author. "WTF is going on with Blandings Castle???" turns into "I'm getting a bit frustrated that you've left us hanging on Blandings Castle for so long. The reader may feel like you've swerved away from the 'real plot,' or just feel like the story's unraveled somewhat." By this point, I already know the ending, so I can give constructive criticism on how the point might be improved - particularly if it's not something that can be fixed by a simple "I didn't like X, don't do it." I want the author to have these comments, as a record of my initial reaction, which I see as very valuable - but it's generally necessary to edit them for legibility and tact.