Over what period of time is the transition taking place?
Some transitions appear to 'step' if they are set too long.
Are the framerates of the mp4 and mov files different- eg one is 25fps and the other 30 fps?
If so then you may be experiencing the 'jerkiness' which appears when changing framerate of a video from eg 25 fps to 29.97 (30) fps - this is due to 'pulldown' and can be difficult to get rid of. The effect is worse where there is movement across screen in the video which has the framerate being changed
Thanks johnbaker. That's excatly the case. My MP4 files are 25 fps and the MOV 30 fps. Even thouh I set the whole project to be 30 fps the 1-2 second "stepping" within and/or after a transition takes place. This is especially true when there is a movement across the screen. I wish it gets improved soon with a patch or something. Transitions between the same files are smooth in iMovie so it can be done.