Actually I am planning on doing exactly this with all of the SW-movies. Since I've seen the HDTV-DivX of "Attack of the Clones" on my new 32" HDTV-LCD (via DVI input) I am looking deparately to get the HDTV-version of "Phantom Menace" as well. As for the OT (from which I assume no HDTV-versions exist), the pristine 2004-DVDs are simply perfect for upscaling them to 720p. I've done a 5-minute test-clip of "Empire" upscaling it with several AviSynth-filters, and the quality just blows the DVDs away easily.

I know, people keep saying that upscaling doesn't add anything to the image, but that's not true. AviSynth-filters like "LimitedSharpen" add artificial detail, and really make the image look outstanding (especially when fed to the TV via DVI instead of RGB-scart). Here some samples:

Empire Sample 1
Empire Sample 2
Empire Sample 3
Empire Sample 4
Empire Sample 5
Empire Sample 6
Empire Sample 7
Empire Sample 8
Empire Sample 9
Empire Sample 10

On closer observation there are some artifacts visible, which make the image look like it's painted... these are only visible on stills. When in motion, they get pretty much compensated.