Q: making a 16:9 timeline into 1.86:1

There are several ways to do this, I prefer to do it with the Widescreen Matte effect that is in FCP, as opposed to using an Image with a Matte.

Here is a quick tutorial -

1) Edit your 16 x 9 material to the timeline -

Go Effects > Matte > Widescreen -

and drag it on to the first clip in your sequence -

Once it applied, click on the Filters tab and set the type of widescreen you want, and use the offset control to move the clip contents higher or lower within the widescreen frame.

Once you have the first clip done, click on it in the timeline to select it and once selected type Command + C to copy it. Click on the next clip in your sequence to select it ( or select multiple clips ) and the control-click on the selected clip and from the drop down menu choose Paste Attributes - the Paste Attributes window will open -

Check the Filters check box and click OK - the widescreen effect your set up on the first clip will be applied to all the clips you had selected -

Now all you have to do is to step through your clips and make adjustments to each clips offset (if needed).

MtD