Picture in Picture chokes preview

Greetings,

When I overlay video into iMovie 11 using the picture in picture feature it chokes the video when I preview it. I thought at first this was due to an older computer I used a few years ago but it still does this today using a 2011 top of the line iMac. When the movie is exported it looks fine but it really is important to be able to line up the clip inside the clip to see how it plays. I'm assuming iMovie doesn't process "real-time" like Final cut X, but am I missing something?

//Cheers