When I drag the clip out of the source panel down to the timeline, the view is displaying an arbitrary ~20% of the image, blown up the fit the screen size.
Can anyone please help me with this?
You're using a 1920x1080p clip in what appears to be a 720x480 DV sequence.
Either use a sequence preset that matches your footage (File > New > Sequence) or drag one of your clips to the New Item button at the bottom the Project Panel:
Retrieving data ...