Nope this is within fcp.
So this will make new media at 720p (the original is 1080 24p) Both need to be the same frame rate.
I'd suggest you do a test of this workflow in case I've made a mistake or left something out (hard to imagine).
There may be a better way to do this, and if someone knows of one, I hope they'll speak up.
Assuming you haven't started to edit and that the original material is in a fcp friendly format, just create a new project and bring the material in to the project. Then media manage the project. Shouldn't matter whether it's on the same or a different hard drive as long as there is sufficent space. I suppose there might be some kind of slight difference in the duration of the process if it was reading and writing to the same drive, but can't imagine it would be very important.
As I said, do a test with just a clip or two to test the workflow.