I'm having a problem in FCP7 with all video transitions. Every transition has a rolling flicker throughout the effect. What is causing this?

I recently upgraded to FCP7 from FCP6. I am now having an issue in playback with all video transitions. When I add a transition to my video it does not consistently play smoothly. I now appears to have an old "film" like flicker rolling through the effect. Our video was shot on a dslr and brought into FCP with compressor as a prores 422 file. We use magic bullet for our coloring effects which are in place on this video. When I was working on the project in FCP6 I did not have this problem. When the project was complete we upgraded to FCP7. The client has now come back to us wanting additional footage. So I opened the old project up into FCP7 and checked yes to all format updates to meet with FCP7 guidelines. So far this is the only problem I've encountered. Any help would be greatly appreciated.