Q - 1. What's your best and/or simplest way of creating this within AvidFX/Red? (Screengrabs or files of composition would be great)
A1a - Have you checked out the Library Browser? There are lots of cool pre-made transition effects preinstalled on your system, all of which are accessible via the Lib Browser window. You can insert (add) or open (replace) any transition from the library into the timeline.
A1b - So to achieve the transition effect - just trim the media clips and butt them together in the timeline. Then apply the RED / Avid FX transition between the clips. Then enter the RED / Avid FX UI and start compositing your effect. You can then save this as a project to the Library and reuse it on other clips or projects.
Q - 2. If the BGwipe is too short whats the best way to freeze either end within AvidFX/Red? (I thought about nesting the .mov in a container or precomp to achieve that...)
A2 - If the clip is too short then I'd suggest that you click on the face track of the imported (short) clip and then enable the Loop Movie option and set the loop mode to Back and Forth.
Q - 3. Is there anyway of using a precomp or 3D container as a mask source within AvidFX/Red?
A3 - Yes - both of these options should work for you. Just drag the pre comp track or the container onto the mask track of any other track (face mask or shape mask) and that should do it.