I’ve had the same problem using FCP 7.0.2. I’ve found that you can edit the footage in a lower quality sequence first (try 960×720 DVCPRO HD 720p60), then copy and paste it into the 2048×1024 sequence. You’ll just have to remove the motion and distort attributes before exporting.
Also, in the 2k sequence, set your RT playback to medium and you should be able to playback without the green and pink mess, however when you stop on a frame it may still be there.