I would avoid lessening the quality of the iMovie file you are trying to make. The point of making a high quality vid is that is supposed to be just that. Don't lower it to conform to the software. The software is supposed to conform to your needs. With that said, it seems like apple has not sent out patches (heaven forbid they send updates for iMovie) and while browsing the discussion pages I found the solution to my/your issue.
One solution involves inserting a command into your Terminal App. I don't like using Terminal because I'm a novice with it and don't trust putting in commands I know nothing about that can wreak havoc on my mac.
The other solution involves simply turning off Time Machine backups and then exporting/finalizing your project. I personally performed a backup (hadn't done so in over 20 days) and once the backup was complete, I disconnected my backup HD and TURNED OFF Time Machine. Then I finalized my project and it came out fine in 1080/720, etc etc.
Recently I have shot a good 96 hours of footage with my GoPro hero3 had it all completely edited like i wanted and i got the same, "Not enough space must quit iMovie"
Make 3 copies of your video
2. __video______ 1
3. __video______ 2
Then start from the end of your video, delete sections of your video in groups. After each group try to export, once you are able to export the first one. Go back to Video1 as shown. Now start deleting all the video that has been exported from "Video" after that is done, try to see if you can export what edited video you have. If not please start deleting by sections again and remember to try to export it after each section. After you have completely exported all of your edited footage. Now click in your Macintosh HD and click >>File>>New Event. Name it Mission complete.
Now open a folder and click movies>>>>iMovie events>>>>Mission complete. Now drag the video/movies that were exported into the Mission complete folder and open iMovie.
New Project>>>Mission complete
Drag each set of exported footage and like puzzle peices place them where they need to go. After you have ran through and OK'd the video with the small screen. Click export in whatever quality you desire.