So why does Lucasfilm know about his restoration if he doesn’t plan on releasing it?
Because he told them about it, probably.
Mike has done contract work on a few projects for Lucasfilm and Disney over the years and has many contacts there. He has always been open about Legacy and the fact that he wasn’t going to release it is precisely why he was able to obtain such good sources.
His plan after finishing the work was to set up a screening for executives with the hope that one day it might be actually used for a release. He last stated in November that he had found “the guy” at Disney and through those conversations was connected with “the guy” at Fox with tentative plans for a screening in late February.
And yes, he has good sources but he also developed new techniques to combine information together from his multiple sources, so his restoration is most definitely the best SW has ever looked.