Well, it's problematic as there is no such thing as a 4:3 HD format. What you are doing is very non-standard, and FCP is based on standards. One standard is that 960x720 is anamorphic 720p HD. If you look at the sequence settings, if you click on the FRAME SIZE drop down you will note that it says "960x720 (16:9)." So it will stretch it out to fill the frame.
Now, you can try to trick it by choosing CUSTOM 4:3, and making it 960x720, Pixel Aspect Ratio SQUARE. See what that does.
Hi Shane, thanks for the advice. I know it is non-standard but it would work for us and our clients if this one annoying feature didn't exist! I am prescribing in the geometry tab in compressor
Frame Size: 960 x 720 [Custom (4:3)]
Pixel Aspect 1.0000 [Square]
Which is what makes me think the resulting file IS most probably square pixels...and that is why I thought (this is a guess) that it is more of a FCP IMPORT issue, where FCP is recognising the 960x720 frame size and either ignoring the pixel aspect ratio or just assuming it was shot anamorphic. Hmmmm...any more ideas??