What are then sequence settings? For best performance when mixing these formats, you need to use ProRes 422. The Canon 5D should be converted to that format before you begin editing. You should NOT be editing the native files that camera uses. If you have a red bar in the timeline when you add HDV...then something is horribly wrong. If you use a ProRes 1080i69 sequence, all should be fine to mix. And you should only get a green render bar.
I believe that you started with the 5D footage, without converting it to ProRes...keeping it H.264, and the sequence is not H.264, thus the red RENDER bar. FCP doesn't edit H.264 native like Adobe CS5.5 does. It must be converted.
Here's how to do that:
Tapeless Workflow for FCP 7 Tutorial
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