[Frank Coleman]

Here is the work around, found in Apple Discussions after much furtive Googling.

Close the project that is corrupted and make sure it is highlighted in the Project Library.
Go to File/Export XML and save that file (I saved mine to a different drive).
Re-import that file, generating a new project.
Close and Restart the FCPX App.
STAY AWAY FROM THE PROJECT FILE WITH THE CORRUPTED TIMELINE.
Open the newly project created via the XML import.
Everything should be there and working fine.