...when I go to Modify Settings it shows me various video properties... I understand I can enter Custom anything... but not sure what the option is for 4:3? I may be mistaken, but it seemed to me 16:9 would stretch a square image a bit much, and 4:3 less so?...
While FCPX defaults to "Fit" you can easily change an entire batch of stills to "Fill" or whatever you want -- before putting them in the timeline. E.g, select the group of photos in the Event Browser, then in Inspector set them to "Fill". Any of those when added to the timeline will automatically fill the frame.
There's an inherent compositional conflict whenever you need to mix 16:9 video and 3:2 photos. Unless you scale the photo up some, it will either be pillar boxed (if on a black background) or the edges of the underlying video will show (if photo is a connected clip).
Since that's normally a case-by-case decision, it's typical to leave the photos set to "Fit" and whenever you add one to the timeline, scale it as needed. You can use the Ken Burns effect to add motion, and set the starting point so it fills the frame.
However there are cases where you can't scale the photo up due to how it's composed, yet you need a more artistic presentation. There are various 3rd party effects which can assist, such as "Vertical Video Solutions" from FCPEffects:
https://www.fcpeffects.com/collections/entire-catalogue/products/vertical-video-solutions
I've never used that one, I just happened to see it.
The only real solution is shoot the photos so they are composed 16:9. Some cameras can actually acquire at 16:9. Normally 3:2 photos aren't a big deal but if you know from the beginning the photos are intended for use in a video presentation, then composing them for 16:9 when they are originally shot can help. Even cameras which don't actually acquire at 16:9 can sometimes overlay lines on the viewfinder to help the photographer remember to compose it for 16:9 use.