RED behaves as a filter when used in FCP so you simply drag it from the filters group and drop it directly onto a clip in the FCP timeline. Then, you should double click the clip with the filter and you will see that the RED banner will appear in the Controls Window. Click on the banner and the RED interface will appear. Create the effect that you want and then click on the apply button to return to the FCP interface.
RED is resolution independent - and when used on a clip in FCP, the clip determines the resolution. To create an HD effect, apply RED to an HD size clip.