I think I can shed some light with a personal experience that gave me some insight into how FCP works with JPG’s.
First off, work at the highest video resolution available…HD 1920×1080.
If you have the timeline codec set to ProRes…you’ll have to render large JPGs that are imported into that timeline.
I was bringing in a photo that was something like 5000 pixels wide, FCP would scale it down to 20 something percent to fit it to canvas. Then when I would scale it to 100%, it would be pixelated. The bar above the timeline was green, so it was only showing a preview at lowered resolution. If I changed the sequence codec to Animation it would force render that frame on preview and it would look fine…so my experience taught me that your preview is just that, a preview…not final until it is rendered.
HTH.
-Jason