720p might be the problem.... but the one thing I would suggest you look at to aid playback, is your Realtime performance settings.
I've attached a screen grab of the settings you probably should be using. Safe RT is really only for broadcast to make sure you aren't dropping frames. The dynamic settings on both the video and audio just tells Final Cut that it is alright not playback at full frame/ sample rates if it means keeping it smooth and watchable. Otherwise you will have to render all the time.
As Rounik says, it is advisable to render to make full critical decisions before exporting, but the Unlimited RT thing will allow you to put all kinds of effects on and still playback without necessarily having to render.
Oh, and that tab is in the top left hand corner of the sequence, right next to the sequence name.
Hope that helps.