FCP Editing: Timeline Footage Looks terrible in timeline & export its 4:3
It seems to me from a high level, two things. First off your project settings in FCP do not match your source materials. First off you should transcode one of your two sources to a common format so you are dealing with only one aspect ratio and frame size, it may require cropping or scaling down some of the larger content to match the smaller one (i.e. bring the 960x540 down to 720x432 so that the width of that clip is the same width as your PAL source, not the other way or you will get fuzzy resolution)

Next set up your sequence setting, to match your source 720x576. 
Usually when you drag a clip to FCP new sequence in FCP 6.06 the dialog message in fcp will offer to create sequence settings to match your clip, do it, just pick the lower res clip, and scale down the high res ones.

As you bring in the 720x432 (formerly 960x540) you will need to adjust aspect manually in FCP for that clip (double click on your clip in timeline, click motion tab, then adjust/play with the distort Aspect Ratio slider) , there will be a little black on top or bottom of the clip, but at least that way you are no blowing out and scaling up the PAL content, and you can manually adjust aspect if needed.