FCP Editing: Timeline Footage Looks terrible in timeline & export its 4:3 Im having difficulty in final cut pro, My captured footage looks absolutely terrible on the timeline and when its exported it’s in 4:3 and looks squished, What is the BEST outcome I can setup with this footage, Im a tad naive when it comes to codec’s etc, I literally have two days to get this project completely done and im really struggling on what settings I need as my two source materials are different size’s codecs etc.
 I have two sources of captured footage that Im editing between. the first is in:
DV - PAL, 720 × 576, 4:3, 25 fps, 28.80 Mbps - Audio: DV stereo, 32 kHz, 28.80 Mbps

The second camera’s footage is in:
.mov Apple Intermediate Codec, 960 × 540, 25 fps, 29.43 Mbps - Audio: 16-bit Big Endian stereo, 48 kHz, 1.54 Mbps

The sequence settings are set to:
720x576, CCIR 601 / DVPAL (5:4)
Pixel aspect ratio: PAL - CCIR 601 (720 x 576)
Field Dominance: Lower
Anamorphic 16:9: off (Tried exporting with this on and off)
Compressor: Apple ProRes 422 (Was defaulted to DV PAL)

I use Final Cut Pro     6.06 on an Old Macbook running OSX 10.5.8
I have my mac plugged into an external TV as a monitor at 1920 x 1080

The footage is being used on a projector for an audience, Either as a DVD or File, It may be used on the web later.

Here is a screen grab of the DV footage in the timeline in final cut pro and opened up the source footage in quicktime side by side.
http://i.imgur.com/fs6D7.jpg
It seems to me from a high level, two things. First off your project settings in FCP do not match your source materials. First off you should transcode one of your two sources to a common format so you are dealing with only one aspect ratio and frame size, it may require cropping or scaling down some of the larger content to match the smaller one (i.e. bring the 960x540 down to 720x432 so that the width of that clip is the same width as your PAL source, not the other way or you will get fuzzy resolution)

Next set up your sequence setting, to match your source 720x576. 
Usually when you drag a clip to FCP new sequence in FCP 6.06 the dialog message in fcp will offer to create sequence settings to match your clip, do it, just pick the lower res clip, and scale down the high res ones.

As you bring in the 720x432 (formerly 960x540) you will need to adjust aspect manually in FCP for that clip (double click on your clip in timeline, click motion tab, then adjust/play with the distort Aspect Ratio slider) , there will be a little black on top or bottom of the clip, but at least that way you are no blowing out and scaling up the PAL content, and you can manually adjust aspect if needed.