On the desktop, the 29.92, 4:3 files dragged from the camera files are .mov and QT shows it is using the Apple MPEG-4 decompressor. When I import them in to FCP with DV NTSC 48 and drop them on the timeline, I don't get the usual pop-up about changing the timeline settings of the timeline to match the sequence. The clips need rendering and they show up in the browser as 10 fps rather than 29.97.
Is there a preferred workflow for a toy cam like this or does everything need to be rendered?
You'll want to convert your footage to a more edit friendly format first. Proress 422 would preserve the quality. You could probably get away with just doing it to DV50. I try to stay away from straight DV in any situation. If you add graphics to your edit they will be unnecessarily compressed.
Mpeg streamclip is a free program that will do it or apple compressor.
Your final timeline should be 640x480 @ 30FPS, I suspect the timeline will set itself to that once you have converted the footage and re-dropped it.