I’ve done a little more digging. I’m reading the man file on ‘cp’ (The terminal command). On suggestion is: “Note that cp copies hard-linked files as separate files. If you need to preserve hard links, consider using tar(1), cpio(1), or pax(1) instead.”
One nice thing about using the terminal to do the copy is that the -R switch with ‘cp’ not only does the recursive copying with the folder structure, it also continues after the error of the failed alias copy. Finder on the other hand fails and doesn’t recover very well.
So, I guess the answer is, that burning a FCPX project onto an ISO format where the project has alias links to media is problematic.