I've run into the overlapping problem myself. Sometimes checking the "feather edges" box helps for those overlays, but then that has to render. I cut the overlapping pieces into separate clips to minimize renders, so that helps a bit...
As far as FX or whatever goes, in my own workflow I would probably leave the widescreen phase for one of the last steps.
If there's too much overlapping in the video to make futzing with the filter worth it, you can always create bars with overlapping cropped slugs or black matte layers.
Instead of the filter (which I don't like very much) I just drop two slugs onto the timeline and use those to mask off the top and bottom of the image. That way I know the matte doesn't change from shot to shot and it's very easy to re-frame shots under the slugs.