Problems with Slow-motion in iMovie 09

Ran into some problems last night trying to use the speed changing function in iMovie. My highlighted clip needed to be converted before speed could be altered. I clicked "Convert Original Clip" and waited about 1-2 minutes while the progress bar showed the conversion taking place. Once the progress bar reached 100% the bar disappeared, but there was no change in the timeline or clip adjustment settings. Looks as though nothing happend.

Any suggestions? I am using Canon 7D files at 720p/60fps. Converted in MPEG Streamclip to AIC format. I then imported the AIC files into iMovie unchanged.

Is there a better setting I should be using for AIC? Can iMovie handle 60fps or is it changing my codec settings without me knowing it?
 
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