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You're thinking like FCP. Avid works differently.
You don't need to start another SD project. You can work in your HD project and still view SD. Click the format tab in at the top of the main project/bins window to 30i from 1080i. Click the green box at the bottom left near the timeline to full green, then I'm sure your footage will look better. Continue to edit. When you are ready to output to SD, then go to consolidate/transcode and trancode your sequence to 1:1 MXF.
This will create a new timeline.
Cheers.
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