I'm wondering what is going on here - I'm using FCP 7.0.3, ATI 5770 in MacPro running Snow Leopard and I'm putting video with an alpha channel on top of the stock Lens Flare generator. The effect looks correct in the canvas window of FCP but on my external monitor the flare is partially cropped by the alpha channel of the video layer above it. That wouldn't be bad except the cropped version is the one that is rendered in the final export!

I tried a couple different sequence settings but that has zero effect on the problem.

I was wrong, it wasn't the alpha channel or the video above the generator - it happens with the generator alone!