Ok, when this export finishes, you'll probably want to verify the final movie clip, then you can go back and trash the intermediate file (which is probably pretty large).

Now that you're completely overwhelmed, I should probably tell you that there is an easier way! If you could find it in your budget to buy Final Cut Express, you'd be able to use this same, Quicktime component from Final Cut Express, and all you'd have to do is place the foreground clip over the top of the background clip (in layered fashion), add the effect to the foreground clip, tell FCE you want to use an alpha channel on the foreground clip, and you'll have an instant composite that you can assemble easily into your, wonderful movie just like you were arranging building blocks. Ok, I admit that there is a learning curve to FCE, but if you're going to be doing a lot of compositing, it's probably worth it.