Any time that you have to send away your actual genuine passport, it is a good idea to keep a notarized copy of it, in case any other agency asks to see it in the meantime.
In the situation you are imagining, you can submit the application using a certified copy, and only send in the real one when the visa has been approved and the label needs to be stuck in - so you won't be without the passport during the whole time of processing, only just at the end. Since, in NZ, magistrates don't charge to certify a copy of anything, you could get two certified copies of your passport, then, if necessary, you could apply for a further work visa using one of those. (In theory, one branch of INZ could check with another branch about documents being held, but it's not as easy as having papers right there in the file to look at, and can cause extra delay, so if you can avoid it, it's good.)