When the RTExtreme render mode is enabled, Final Cut Pro or Final Cut Express is configured to play the maximum number of effects in realtime... but in many cases the system just isn't able to deliver.

Furthermore, video transitions don't render when you select them in the timeline and press Apple + R (shortcut for render selection).

The solution is actually quite simple: Select Sequence / Render Selection in the pulldown menu and enable all listed items as shown in the screenshot.

This time the system does what you want it to, always rendering the selected effect when Apple + R is pressed.

By the way: those users experiencing stuttering Cross Dissolve video transitions will find that this problem is also fixed with this workaround. Simply select and render them.