The way I got around this error was NOT to delete any short clips but instead
(1) Consolidate Media choosing to consolidate everything (media and events) - link here to info on how to do this: http://support.apple.com/kb/PH2290
(2) Move project to another Hard Drive physically connected to the MAC choosing to move everything (media and events) - link here on how to do this: http://support.apple.com/kb/ph2289
(3) Re-try Export or Finalize.
Worked for me !!!