I have a backup copy of 10.1.1 and have confirmed that the issue does not exist in that version. It is only happening in 10.1.2. Unfortunately, 10.1.2 projects are not readable by 10.1.1 and exporting the project to XML and trying to reopen in 10.1.1 is giving an error too. "The operation couldnt be completed. Invalid argument."



It is probably because it is 3:00am and I want to go to bed, but this is some BS. I just defended FCP X and all the strides Apple has made to multiple people just 2 days ago, and lamented how nice the performance boost in 10.1.2 was... Right now I have a sequence of 200 images that I have to go back and apply and tweak the KB effect one by one. Probably at least an hour. I wonder is I can keyframe the move and then paste that effect or if the whole paste effect feature is shot.
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I know. Something as fundamental as this getting broken by a x.x.1 release is, as you said, horrendous. In 11 years of using Final Cut I don't think I've encountered a situation where an established feature was completely broken by an update.
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EDIT: Ok. Good news: you don't have to manually apply the effect to each clip. Turning the Crop property off and back on in the inspector for each clip seems fix the problem. You still have to touch each item, but clicking a toggle off/on is not as bad as having to setup the exact same KB manually on 200 images.
This is still very, very, VERY bad.