What format is the original media? What format is the iMovie project? Which version of iMovie? How did you get it from iMovie into FCE? Where in FCE are you seeing the letterboxing?
I am a real newbie so bear with me.
The original media was taken with a Sony HD DVC which I loaded into iMovie09. I'm not sure what you mean when you ask what format is the iMovie project, other than it is in HD. I transfered it to FCE4 using the method described in the video tutorial . I am seeing the letterbox in both work areas.
HD footage is 16:9 (widescreen), so you should be working in a HD 16:9 FCE project. Go to Sequence > Sequence Settings and click Load Sequence Preset. What does it tell you is the current preset?
Well I don't understand why that would be-- you're putting 16:9 video in a 16:9 sequence, so if it's letterboxed, it should be squished. But if you want to blow it up, double-click on it, click the Motion tab in the viewer, and adjust the Scale slider.
Is your camera shooting anamorphic video? My Sony does and I have to highlight each clip individually in the browser, click on item properties in the edit menu then click that it's anamorphic video. That's the only way to get the proper format that I've found.
Select all the clips in the browser. Go the the anamorphic column. Right-click and select yes. All the clips will be checked. Or select an anamorphic preset when you capture it.