Re: Render times extended?

Yes, the MP4 explains a lot. That's a delivery format, not an editing format. It's best to convert those types of clips to a standard edit format before bringing into Final Cut. A great way to do that is to use the free program, MPEG Streamclip. You open the clips in that and export to Quicktime with the DV codec. Then bring the converted clips into Final Cut. You should see all sorts of improvement in the operability of the program that way. Of course, the conversion will need to be done wisely to avoid scaling and interlacing pitfalls. That's beyond the scope of what I can tell you at this point.

One question: When you first placed one of the clips in your timeline, did Final Cut ask whether you wanted to change sequence settings to match the source clip and did you say yes?

A reference movie is a Quicktime movie that does not contain actual video and audio media within it. A reference movie points to--refers to--media that is stored somewhere else. For example, your exported reference movie would be a very small file which would refer to video and audio media stored in the clips on your scratch disk. Reference movies are a good way to export from Final Cut if you are going to use the movie for further processing on the same computer--say, for compressing to MPEG-2.