To: Nat
I made a solution for the transition issues you have
(I had similar issues)
the transition problems never appear with 'scenic' videos
but show BAD when both clips have dialogues
then then audio overlaps - this is bad
so . . ..
my solution is
take a screen shot (option from preview window)
one from last frame of 1st clip
and one from 1st frame of last clip
and place them both in the timeline between the 2 video clips
make each photo duration be a tad longer than 1/2 the video transition
(if too much longer - the video will seem to 'pause' before and after)
eg each clip duration is 2.1 secs and the transition = 4 secs
I made this tehnique work
which was especially hard when some of the audio from original clips
ran PAST the video in to other scenes !
u can see here
http://youtu.be/JhqbBV_AkgI