I’d love to see a project like this. Tried attempting something like this with Sony Movie Studio Platinum a little while ago taking my VHS transfers and overlaying the episodes with the DVD footage but no luck. I did however remaster the audio by overlaying the VHS audio with that of the 2004 DVD’s which was something.
For the “episode” footage, might I suggest using the 2004 UK DVDs (which use the 1998 remasters) rather than the current Restored versions as they more closely reflect the broadcast/VHS versions.
Another good source for this project would be the 2005 Australian “Truckloads of Fun” DVD which oddly enough uses the original Clearwater masters Series 1 episodes, plus “Tenders and Turntables”, “Trouble in the Shed” and “Off the Rails” even use the CW logos and nameboards as they appears on the 1985-1992 VHS releases. The original masters for the other Series 1 and 2 episodes are also used but they are the singular TV rerun versions with no nameboards and CW logos replaced with the 1991/2 Britt Allcroft Company logos. The episodes from this DVD have been uploaded on YouTube but a couple of episodes have been blocked by HiT Entertainment;
Truckloads of Fun (AUS DVD)
Also on a side note, Series 3 had an “early narration” (by Michael Angelis) for the first 16 episodes which were only released on the original 1991 VHS tapes then later redone for TV broadcast and later VHS/DVD releases, as did 8 episodes from Series 4. I’ve already done a preservation of these myself but they’re also on YouTube;
Time for Trouble and other stories (Early Narration)
Trust Thomas and other stories (Early Narration)
Rock and Roll and other stories (Early Narration)
Back to your main goal, I really hope you pull this off and I’d love to help any way I can. I’ve already transferred my Series 1, 2 and 3 VHS tapes to DVD which I’m happy to share with you if they’ll be of any use. Also, Series 2 needs to have the “Screen Legends” ident included!