You might recall that I was easily able to use laserdisc and DVD material in the same frame in Classic Edition, which was a much greater quality difference than this would be. And it looked great.
As far as Sebastian Shaw goes, well, you wouldn't be taking him from the O-OT version anyway. He was in the 1997 Special Edition, which is widely available on high quality on DVD.
As far as the speedup goes, I've had to deal with that before, it's not hard to deal with. Even if time compressed, this would make VERY good raw material for an edit.
But please try to use the CAV non time compressed version, yeah. That would be much less annoying.