no realtime playback of stills in the timeline

Very basic question:

I am trying to playback a .jpg images in the timeline but I get the red bar and they must be rendered.
I have used FCP in the past, and know that I can get RT playback with something as simple as a few .jpg stills. The .jpg's are not extremely large either,

I need to work at 864 x 486, progressive. Is that the problem? (Do I need to work at a certain frame size)
On the RT tab there are no settings. Anything I attempt, I get the red bar.

I am on Snow Leopard, Quad Core Intel with a fast RAID and 8GB RAM (system is not the issue)

any help would be appreciated, I need to get a rough cut out ASAP!!