After running the converter i now have a mov and .ac3 files. It seems the ac3 files are copies of the audio that's in the mov files. Why is the audio file separate, and how (if at all) should I be using these in FCE 4

AC3 audio

You will be getting a separate AC3 file provided as part of the conversion if you selected the 'Extract 5.1ch Audio' option under Advanced Preferences.

This is a 5.1 channel audio file (assuming your camera records 5.1 channel audio) which can be used with Final Cut to edit a surround sound audio track.

Our instructions on how to do this using Final Cut Pro and Compressor can be found here:
http://shedworx.com/hd-information/surround-sound

If you are not interested in surround sound editing, you can switch off the option that creates this file.