I recorded footage at 1080i Progressive mode @ 24fps onto a CF card.

I brought it into final cut pro and it registers as 23.98FPS. I looked at the footage frame by frame, and saw no interlacing at all - so does this actually mean its 1080P footage? The footage looked great and seemed to play back properly.

Then I brought that same footage from the CF card into the AVID. I created a 1080 HDV project at 59.94.(The footage wouldn't seem to import into anything besides 59.94 mode) The avid transcoded it to some proprietary dnx codec, but it was a really fast import. Upon looking at the footage in the AVID, it was all stuttery/strobe looking. The motion was all weird. It definitely did not look right. But I couldn't figure out any other way to import the footage into the AVID. So it appears the AVID can't handle the 1080i Progressive mode footage.. is this correct or am I doing something wrong?

Well, camera makers say their cameras do 24p, but in reality, that is short for 23.98p so final cut is actually doing it correctly. Depending on what camera you used and which setting, you may or may not see interlacing. For example, I use an XL2 and every 5th frame is interlaced. As for the Z7U, I heard it does true progressive so you shouldnt see progressive, but I may be wrong.

As for AVID, I have no idea what is going on there. There are many flavors of HDV and perhaps AVID hasnt updated their software to support the HDV formats available. Keyword being perhaps, meaning I am really not sure about this one.

I think you can switch that XL2 to the true progressive mode off the pulldown mode, can't you?

FCP is usually ahead of Avid when it comes to handling all the different cameras' progressive modes. For example, Avid (last time I looked a couple of months ago) still won't handle Canon's 24 and 30 fps progressive modes but FCP has been doing that for close to 2 years now.