Taking your word for it; look like the transition is being execure forore the blend mode. In the case of a dissolve you might try doing the dissolve with opacity as a work around
Thanks Curt but from my original question "so I tried using opacity keyframes instead....same problem."
Sorry; Im not opertating properly today. I'll try to duplicate the problem later to see if it is a global thing.
perhaps you are not leaving enought handles on each side of the transition. If you have a 1 sec transition, you need to leave enought frames past the point you want the transition to happen. So 1/2 sec of additional frames for each clip. see help files for "handles"