Best way to edit mashup video of downloaded movies?
Not on FCPX, but on Avid.  However, this is what I do and it may help:


Download at the maximum possible resolution you can download at.
Use AVIDemux as my rough-cut tool to mark 'A' and 'B' and save as clips with meaningful names.  Leave a few seconds on either side. 
Import clips into Avid


Sometimes, I have to convert the container to 'MP4' or resample frame rates and AVIDemux handles these well.