Another option for editing avi files natively in FCP is to install a 3rd party app called Perian (https://www.perian.org/). I have it installed and use it specifically for editing content from Camtasia, which is a windows product used for recording screen capture movies. If you’re curious about the results, check out http://www.breault.com, and right on the homepage is a link for our “movie of the week.” There’s some obvious compression and lossy issues, but they are due to converting to the flash format and scaling from 1280×720 down to the current size. Typically, my workflow consists of using a 720p square-pixel sequence format, with the Apple ProRes422 codec so I can drop in 720p interview and talking head footage from an HVX200.