Apple Final Cut Pro 7 - Manual (Page 539)

The selected area in the sequence is replaced by the source clip. Final Cut Pro automatically
calculates the clip duration.
Before a replace edit
New clip replaces the
selected area of the
sequence.
After a replace edit
Superimposing Clips
In some cases, you may want to place one clip directly above another clip in a different
track. This is called a superimpose edit. You can use a superimpose edit to quickly stack a
source clip on top of a clip already in your sequence. If there isn’t an available track in
your sequence, Final Cut Pro creates a new one for the source clip.
Superimpose edits obey the standard rules of three-point editing, except that if no In or
Out points have been specified in the Canvas or Timeline, the position of the playhead
in the Timeline is not used as a default In point. Instead, the clip that intersects the position
of the playhead in the current destination track provides the In and Out points for the
source clip (as it does when you use the Mark Clip command).
You can set the In and Out points in the Canvas or Timeline so that the superimpose edit
spans multiple clips, as long as there’s enough media in your source clip to cover the
specified area.
If you perform several superimpose edits in the same location, each new source clip is
edited into the video track directly above the current destination track, and all other
previously superimposed video clips are moved up one track to make room. If your
superimposed clip contains audio, the source audio is placed on new audio tracks
immediately below any occupied audio destination tracks already in your sequence.
539 Chapter 36 Three-Point Editing