If you have the Promax DV Toolkit 3.0 installed, the option to render in YUV when using Final Cut Pro 1.2.5 is not available. Even if the Promax codec is not in use in favor of the Apple DV codec, the "Always Render in RGB" checkbox is checked and dimmed as long as the Promax codec remains installed.
The solution is to remove all of the DV ToolKit extensions. The uninstaller does not do this, so you must remove them individually by dragging the necessary files to the Trash.