What is the best mode to work in Photoshop when making banners of high quality? I usually work in RGB and save them as .JPG. Is this the way everyone is making those flashy banners and site designs with?
Do you mean exporting them? I would go with JPG (if your banner has lots of colors, this options has higher quality). For graphics with less colors (3 - 5 or so) I would use GIF for more higher quality.
You can use Save for Web... This is a very good tool, you can control size and quality of file better than with common save method.
I also would recommend you a low-compressed jpg image. My banners appear to have excellent quality when such output format is used.