Keith,
MPEG Streamclip is a great app and I use it several times every week for a variety of conversions tasks.
FWIW, FCE will work with many still image formats as long as the images are under 4000k pixels and are in RGB Color Mode. Images in Grayscale, Indexed or CMYK Color Mode will be in compatible and must be converted to RGB prior to importing intoo FCE.
As for still image file formats, I prefer using uncompressed TIFF files. Of course, JPEG images will work, but the JPG compression scheme is such that every time you save a JPEG image, it gets recompressed and that recompression process causes unwanted artifacts which only multiply with each save/resave.
BTW, the term "import" in the context of an FCE project simply means "to associate" a file with that project. FCE and FCP are essentially just a complex database applications that keep up with all of the locations of the files you import and render. Whenever a file is moved, the location path changes and FCE will claim that file is offline because it's no longer at the same path location as before. The reconnection process simply 'shows' FCE the new location path. One of the most common mistakes a lot of people make when using FCE/FCP is to import files from removable sources such as CD/DVD discs or a thumb drive. Then they can't figure out why the media goes offline when they remove the source.
Perhaps it's an organizational illness I have (aka: anal retentiveness), but since FCE creates folders for each project when you capture or transfer footage, and those folder bear the project's name, the logical place to store imported files such as still images or other graphics would be that same folder. It makes it so easy to keep up with where all the files for your project reside.
-DH
