Hi
Just had the same issue. Dissolves work when you scrub frame by frame but not when played.
The solution for me was to go into sequence – render all and make sure preview and full have ticks next to them. Do a full render. You will see the render bar at the top of the timeline above the dissolves change from green to a blue/grey colour. Hit play and it should work.
Just for note Im using FCP 7 with apple pro res 422. Sequence 1920 x 1080i HDTV. Footage shot on Canon C300.
Chris.