P: Morph cut - Analyzing in Background never completes

I have a simple headshot cutting to the same head, same everything a few seconds later.

All other transitions work find. I try morph cut and see 'Analyzing in background.' Never see sign of progress - should I see it chewing through frames somehow?

I have gone to project settings. Tried both rendering settings. One thing - When I do GPU acceleration my still frames look like garbage - example:

http://www.screencast.com/t/rPiWL6yL

Software acceleration looks fine. No idea if these items are related.

Have run through all preferences. Don't see anything that might be turned off. BTW - working with MBP 15" late 2013. Latest OS.