I am rather lost and have been banging my head against the wall with this one for quite a while.
I shoot in 720p 60 frames on my 7d. I then convert it to ProRes and work with that in FCP. I found that the settings FCP automatically uses when I first add the footage to the time line squished (real technical term, I know, Example http://www.vimeo.com/9442101) the footage vertically into a letterbox. Now when I change the sequence settings the footage is scaled correctly but does not come close to fitting the screen. How is it that my 720p footage isn't fitting a 720p sequence setting?
I found I can fix it with new projects by manually selecting a sequence setting for the prores I am using. It will not allow me to go back and do this to my finished projects. However it will not allow me to move a finished timeline into this new sequence and I really want to avoid re editing everything. The two solutions that would work are some way to fix the formatting in the old sequence or some way to move a finished timelene.
In your sequence settings your Pixel Aspect Ratio should be SQUARE, leave Anamorphic unchecked.
Your frame rate should be 60 or 59.94 depending on the camera setting you originally shot (sorry I'm in PAL land and don't have these issues also not absolutely sure what Canon did with the 7D, I know that prior to Firmware upgrades the 5D was 30p not 29.97).
You really don't need to use HQ in ProRes SQ is is equally good with this footage.